Issue Date: 
Thursday, January 31, 2019

Tenders and VAT

By Werner van Rooyen

31 January 2019

One question that gets raised during each HowtoTender Workshop is must my business (or I) be registered for Value Added Tax (VAT) in order for me to respond to a tender? Or, must I register my business for VAT?

The answer according to the VAT Act, 1991 (Act No. 89 of 1991) is simple:

  • If your turnover is more than R1 million per annum then you have to register your business (or yourself in the case of a sole proprietor) for VAT.
  • There are commodities that are exempt from VAT and if you supply these commodities you do not have to register for VAT. I am not going to go into these technical issues for now.

There is such a thing as voluntary registration. You can register your business voluntary for VAT if your turnover was more than R50 000 for the previous twelve months preceding your registration application.

It is about voluntary VAT registration that I want to talk about. One thing that is a fact in South Africa is that businesses are legislated to death. There are so many laws and Regulations that have to be complied with that entrepreneurs struggle to focus on the most important thing in their business and that is sales. My advice is to stay un-registered for as long as possible – especially if you are a start-up business or a small business. I ask the business owners why they want to give themselves more paper work to do if it is not compulsory to register for VAT.

In my opinion the problem lies within big business. They “force” the small businesses to register for VAT otherwise they do not want to do business with the small business. It starts with big business’ procurement procedures from which they do not want to deviate – you as small business owner must supply them with a TAX INVOICE otherwise they cannot do business with you. This is nonsense; big business must compromise to assist the small business to grow.

Then there is the matter of pricing. Theoretically there should be no difference in price between a VAT registered and a Non-VAT registered supplier. If they procure form the same wholesaler and their mark-up is the same then the price should be the same. The only difference being the VAT that the registered supplier has to add to its price.

Although there are ample places in the Standard Bidding Documents that ask for your business’ VAT registration number it is not a pre-requisite to be registered for VAT in order to respond to a Tender or a Request for Proposal or any other name it might be called. You might be confronted with a Tender Official that says you have to be registered for VAT, if so, just remind that Tender Official of the VAT Act.

The most important thing to remember when it comes to VAT when you respond to a tender is when it comes to pricing – 99.99% of the time your price must include VAT.

To learn more about this and many other tender conditions attend our “Become a Tender Expert” 2-Day workshops presented in Johannesburg, Pretoria, Durban, Port Elizabeth and Cape Town. Book and pay online at www.howtotender.co.za. Please contact Estelle at Estelle@howtotender.co.za should you require more information.

This article was written by Werner van Rooyen, Director of HowToTender (Pty) Ltd which specializes in tender consulting and tender training.

Title Closing Date Tender No.
IT Services 2019-09-06 11:00 NAMC/ 033/ 07/ 2019
The Provision of Travel Management Services for a period of Three years for National Agricultural Marketing Council 2019-09-06 11:00 NAMC/ F01/ 2019
The merSETA would like to invite potential service providers in the insurance industry to provide insurance brokering and claim services for permanently employed staff members 2019-09-05 12:00 RFP005/ 2019
Appointment of a Service Provider to provide Online travel management services to Provincial Departments and Public Entities in KwaZulu-Natal for a period of three (3) years. 2019-09-17 11:00 ZNT 1221/ 2019- G
Request for additional qualified panel to be part of the KwaZulu-Natal Film Commission production crew for a period of 3 years. 2019-09-09 11:00 KZNFC- T08/ 19/ 20
Provision of a turnkey service provider to write, translate, edit, design, illustrate, produce and distribute two Gautrain children’s books 2019-09-06 11:00 GMA/ 006/ 19
Provision of Upgrade and Integration of existing GMA Office Security Systems: CCTV & Biometric Access Control 2019-09-06 11:00 GMA/ 007/ 19
Terms of Reference for the Implementation of Skills Development Programmes For Government Officials and Teachers in the Northern Cape, Limpopo, Kwa-Zulu Natal, Mpumalanga, Free State, Gauteng, Eastern Cape And North West on Behalf of the Provincial Departments of Education 2019-09-09 11:00 SCMU: 08 - 2019/ 20
Delivery of pre-screening services to the dti for recruitment purposes for a period of 24 months 2019-09-06 11:00 dti 07/ 19- 20
The Appointment of a Service Provider to Develop a Business Plan for the Property Namely Remainder of the Farm 15 Dassenberg; Farm 16 Vriesfontein And Remaining Extent of Farm 17 In Extent of 1219.9742 Hectares, Cape Rd, Western Cape. 2019-08-23 11:00 SSC WC Q10 (2019/ 2020) DRDLR
Appointment of a Service Provider/S to Conduct Comprehensive Farm Assessments on Selected Restitution and Pro-Active Land Acquisition Strategy (Plas) Farms and Monitoring of The Stimulus Package Projects Initiated by the Department Of Rural Development and Land Reform In Nine Provinces for a period of(3) three years. 2019-09-06 11:00 5/ 2/ 2/ 1- RDLR 0031(2019/ 2020)
Appointment of a Serevice Provider(S) for Transalation and Transcribing Of Evidence In Criminal And Departmental Hearing for a period of two (2) years 2019-09-16 11:00 19/ 1/ 9/ 1/ 02 TP (19)
ZNTD 03895W: WIMS 063665: Kwazulu-Natal: Department of Education: Durban: Masimdumise Junior Primary School:Water and Sanitation: Phase 3 2019-09-20 11:00 ZNTD 03895W
ZNTD 03916W: WIMS 063661: Kwazulu-Natal: Department of Education: Durban: Ezindlovini Primary School:Water and Sanitation: Phase 3 2019-09-20 11:00 ZNTD 03916W
Appointment of a service provider for the outsourcing (provisioning) of three Specialised Research Papers for the legal fees investigation of the South African Law Reform Commission for a period of six (06) months 2019-09-06 11:00 RFB 2019 02
ZNTD 03852W: WIMS 063747: Kwazulu-Natal: Department of Education: Durban: Jonase High School:Water and Sanitation: Phase 3 2019-09-19 11:00 ZNTD 03852W
The Appointment of a Service Provider to Assist with the Development, Co-Ordination and Implementation of the Environmental Protection and Infrastructure Programmes Advocacy Strategy in the Environmental Programmes Branch of the Department of Environmental Affairs 2019-09-06 11:00 E1524
ZNTD 03875W: WIMS 063779: Kwazulu-Natal: Department of Education: Durban: Iwetane Primary School:Water and Sanitation: Phase 3 2019-09-20 11:00 ZNTD 03875W
ZNTD 03849W: WIMS 063753: Kwazulu-Natal: Department of Education: Durban: Inhlokozi High School:Water and Sanitation: Phase 3 2019-09-19 11:00 ZNTD 03849W
The Appointment of the Service Provider to Review Learners Learning Materials and Development of Facilitators Guideline for Kids in Parks Programme in South Africa for Period of Seven (7) Months 2019-09-06 11:00 Q- 126/ 19/ 20

Pages

Extension of validity period

By Werner van Rooyen

www.howtotender.co.za

31 January 2019

Those of you who are familiar with responding to tenders will know that it is common practice for procuring entities to extend the bid price validity period. We received the undermentioned queries regarding the extension of the validity period of the bid price.

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