Clarification on tax policy for discounts

In discussions with enterprises, the General Department of Taxation issued Official Letter No. 4991/TCT-CS dated November 5, 2024, providing opinions on VAT and corporate income tax (CIT) policies applicable to commercial discounts for goods and services.

Accordingly, the General Department of Taxation reaffirmed the principle that the VAT taxable price for goods and services is the selling price after deducting discounts. Specifically:

(i) If the discount is calculated based on the quantity or sales of goods and services during a specific period, the discount amount will be deducted from the invoice for goods or services of the subsequent period or the final period.
(ii) If the discount amount is issued at the conclusion of a discount program, the seller is allowed to issue an adjustment invoice accompanied by a detailed list of the invoices being adjusted, the amounts, and the adjusted tax. Based on the adjustment invoice, the seller and buyer will revise the sales and purchase revenue as well as the output and input taxes.

In cases where adjustments to sales revenue, output tax, or input tax related to the discount lead to changes in CIT amounts, enterprises must ensure comprehensive storage of documents, contracts, and agreements pertaining to the discounts. This documentation will serve as a legal and accurate basis for implementing the discounts and for responding to inquiries from the tax authorities regarding the discount amounts.