VAT on tenders

VAT-inclusive pricing is the default

The 80/20 and 90/10 evaluation formulas use a VAT-inclusive price. When a tender document specifies how to present pricing, it almost always requires the inclusive amount so all bidders (VAT-registered and not) can be compared on the same basis.

A common mistake is quoting exclusive and listing VAT separately as "to be added on". Unless the tender explicitly invites this split, your bid will be compared on the exclusive number against inclusive bids — and almost always come out cheaper than it actually is. The evaluation committee may disqualify it on technical grounds or award a distorted preference score.

When to quote exclusive

• The tender document explicitly instructs exclusive quoting in the pricing schedule.
• The buyer is an organ of state with specific exemption (rare).
• The pricing schedule has a separate VAT line for bidders to complete.

VAT registration and tender eligibility

You do not need to be VAT-registered to tender. A non-registered supplier bids without VAT. VAT registration is compulsory only once your taxable turnover passes R1,000,000 in any 12-month period. Voluntary registration is available above R50,000.

If you are VAT-registered:

• Your SARS tax clearance pin and CSD registration must show active VAT status.
• You must quote inclusive and, when invoicing, issue a compliant tax invoice.

If you are not VAT-registered:

• Clearly state "Not VAT-registered" on your pricing schedule.
• The quoted price becomes the final price; you cannot invoice VAT.
• Some tenders favour VAT-registered bidders for compliance reasons — check the functionality criteria.

Preference-point calculation with VAT

Because evaluation uses the inclusive price, a VAT-registered bidder and a non-registered bidder at the same nominal price compete on different effective prices. This is intentional — the state is buying at the inclusive price regardless, so the inclusive price is the true comparable.

The standard VAT rate

South African standard VAT is 15% as of April 2026. SARS occasionally adjusts the rate; always verify before finalising a bid. Zero-rated and exempt supplies (certain basic foodstuffs, financial services, etc.) follow separate rules that rarely apply to typical government tenders.

Invoicing government

Your tax invoice must include:

• The words "Tax Invoice" clearly displayed.
• Your VAT vendor number.
• The purchaser's VAT number.
• Invoice number and date.
• Description of goods / services.
• Pre-VAT amount, VAT amount, total — clearly separated.

Government usually pays the gross amount per the purchase order; you remit the VAT portion on your next SARS return. Payment terms on most PFMA entities are 30 days from a compliant invoice.