For businesses that are simply trading or are distributors for companies, the trade discount service is often encountered. And there are a lot of accountants who can’t distinguish when to determine when it is a trade discount and when it is not? To clarify this issue more, Cong Minh Tax Agent would like to share What is Trade Discount?
Definition of Trade Discount
Discount commerce
Concept: Trade discount is an amount of business discounts that are listed for customers to buy goods in large volume.
< p>In the current market economy, businesses that want to sell goods in large volumes always use trade discounts. Trade discount has many specific implementation forms as follows
Trade discount per purchase (Discounts) price of goods sold on the first purchase)Trade discount after many purchases (After many purchases, the volume will be discounted).< strong>Trade discount after the promotion (After the sales invoice has been issued, then calculate the discount to be enjoyed in the period).
Each type of discount Each discount has its own regulations and makes different invoices and tax declarations. However, there are also general state regulations on this commercial discount, which will be mentioned to readers shortly:
2. Tax regulations on trade discounts
2.1. About discount invoices
According to Point 2.5, Clause 2, Appendix 4, Circular 39/2014/TT-BTC on VAT invoices Trade discount goods:
“2.5. For goods and services subject to the form of commercial discount for customers, on the VAT invoice, the selling price already discounted for the customer, VAT, and the total payment price inclusive of VAT.
If the trade discount is based on the quantity and sales of goods and services, the discount amount of the sold goods shall be adjusted on the sales invoice. , services of the last purchase or the next period. In case the discount amount is made at the end of the sales discount program (period), an adjusted invoice shall be issued with a list of the invoice numbers to be adjusted, the adjusted amount and tax amount. Based on the adjusted invoice, the seller and the buyer declare and adjust the purchase and sale sales, output and input taxes.”
So, based on the above regulations. We divide into 3 cases of writing invoices with commercial discount.
Case 1: Write a commercial discount invoice for each purchase Case 2: Write a discount invoice trade when buying in bulk Case 3: Invoicing the discount amount at the end of the promotion
2.2. About VAT Commercial discount is as follows:
“In case a business establishment applies the form of commercial discount for customers (if any), the VAT calculation price is Sales price has been commercial discount for customers. In case the commercial discount is based on the quantity and sales of goods and services, the discount amount of the sold goods shall be adjusted on the goods and service sale invoice of the last purchase or period. next. In case the discount amount is made at the end of the sales discount program (period), an adjusted invoice shall be issued with a list of the invoice numbers to be adjusted, the adjusted amount and tax amount. Based on the adjusted invoice, the seller and the buyer declare and adjust the purchase and sale revenue, output and input taxes.”
According to the above regulations, goods have trade discount, the taxable price is the discounted price.
Viewing: What is Trade Discount?
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In case of discount after the sales invoice has been issued (Trade discount after many purchases, or after a promotion program), the seller must issue an adjusted invoice clearly stating the discount amount. Deduction, revenue, and tax need to be adjusted. The two parties will base themselves on the adjusted invoice to adjust their purchase, sale and tax revenue.
2.3. CIT
According to the above regulations and instructions, discounts on sales after issuing an adjusted invoice, both the seller and the buyer will reduce it. sales and purchases are not declared when calculating CIT.
3. Accounting for trade discounts
Accountants use account 521 (5211) to reflect the amount of discounts that sales The enterprise has reduced the price for the customer.
Only account in this account the discount made in the period, recorded on the invoice in accordance with the policy trade discount that the enterprise has stated in its economic contract, or commitment.
If the discount is based on each purchase, the discount the buyer enjoys will be recorded as a reduction in the selling price when written. receipt. The amount stated on the invoice is according to the discounted unit price, no discount line is written on the invoice, nor trade discount is recorded in Account 521.
If the buyer receives a discount after many purchases, then this discount will be recorded as a reduction in the selling price on the final sales invoice. Invoices specifying the amount of trade discount that the customer is entitled to and the invoice numbers entitled to the discount. Based on the economic contract between the parties to determine the final purchase. The amount stated on the invoice is the discounted amount, the seller will base on the discounted revenue and tax to account, not accountcommercial discount to Account 521.
In case the parties have entered into an agency contract, or made trade discounts for each sales period, the last day to be determined for debt reconciliation and calculation shall be determined. payment of trade discounts. The last day to close the debt and calculate the discount is December 31 every year. In case an adjusted invoice is issued, the trade discount amount will be recorded to Account 521.
Trade discount can be used to adjust the discount revenue. , but it is also possible to calculate the discount amount and cash out, if the final sale amount is not enough for the discount
3.1. Accounting for sellers with trade discounts, VAT declaration by the deduction method.
Based on sales invoices, accounting:
Increase revenue and output VAT:
Dr 131: Receivables from customers
Cr 511: Revenue from sale of goods and provision of services
Account 3331: Output VAT
Concurrently transfer cost of goods sold:
Dr. Account 632
Credit account 156 Based on the discounted invoice and the discount amount, the following accounts shall be recorded:
Debit 521: Trade discount
Dr 3331: Output VAT
Account 131: Receivables from customers
3.2. Accounting for the purchaser with a trade discount, VAT declaration by the deduction method
Like the seller, if the purchase is discounted, the buyer shall account sales and input tax at the discounted price. If the buyer enjoys the discount after many purchases, the following accounts shall be recorded:
When making a purchase
Debit 156: Goods
Dr. 133: Deductible VAT
Cr 331: Payable to suppliers Upon receipt of discount invoice
If the discount is for inventory, write down the cost of inventory and deductible VAT:
Dr 331: Payables to suppliers
Cr 156: Goods (allocated to cost of inventory)
Account 133: Deductible VAT
If the discount is for consumed goods:
Dr 331: Payables to suppliers
Account 632: Cost of goods sold (allocated to goods sold during the period)
Account 133: Deductible VAT
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