Making commercial discount invoices Circular 78, Decree 123

Instructions on how to make a commercial invoice according to Circular 78 and Decree 123, how to issue a commercial invoice with discounts for each purchase, by quantity…

I. What is trade discount?

Trade discount is a discount that a business will reduce compared to the listed price for customers in large quantities according to the agreement on the discount in the economic contract or commitment when buying or selling goods.

The trade discount will be deducted from the selling price before VAT. Each form of trade discount has its own regulations and different invoicing and tax declaration. Below, fdiinvietnam.com will guide you on how to create a trade discount invoice for each specific case.

II. How to create a trade discount invoice

1. Case 1: Discount per purchase (discount immediately upon purchase)

If the goods and services apply a trade discount for customers, the invoice will state the discounted selling price for customers, VAT, and the total payment price including VAT.

For example: 

On August 20, 2022, company A organized a program to buy DAIKIN air conditioners worth VND 5,500,000/unit (price excluding tax) with an immediate discount of 5% (VND 275,000/unit).

So the pre-tax selling price is: 5,500,000 – 275,000 = 5,225,000 VND. 

2. Case 2: Discount based on quantity and sales (when purchases reach a certain level, you will receive a discount)

The discount amount will be adjusted on the invoice for the sale of goods and services of the last purchase or the purchase of the next period:

• If the discount amount is less than the amount on the invoice of the last purchase, it can be deducted directly from that invoice;
• If the discount amount is greater than the amount on the invoice of the last purchase, an adjustment invoice must be created with a detailed list of previous invoices.

Note: Negative (-) is not allowed on commercial discount invoices.

Example 1: 

Company A signed contract No. 001-2022/HDKT with company B. If it buys 10 DAIKIN air conditioners worth VND 5,500,000/unit, it will receive a 10% discount (VND 550,000/unit).

• The first time, company B bought 4 items: the unit price on the invoice was 5,500,000 VND/item because it did not meet the conditions for discount;
• The second time, company B bought 2 items: the unit price on the invoice was 5,500,000 VND/item because it did not meet the conditions for discount;
• The third time company B buys 4: it is eligible for discount, so the company will get a 10% discount.

Total discount amount: 550,000 x 10 = 5,500,000 is less than the value of the final invoice (4 x 5,500,000 = 22,000,000 VND) so the discount amount can be deducted from this invoice.

➨ The invoice is recorded as shown below:

Example 2: 

Company A signed contract No. 001-2022/HDKT with company B. If it buys 10 DAIKIN air conditioners worth VND 5,500,000/unit, it will receive a 12% discount (VND 660,000/unit).

• The first time, company B bought 5 items: the unit price on the invoice was 5,500,000 VND/item because it did not meet the conditions for discount;
• The second time, company B bought 4 items: the unit price on the invoice was 5,500,000 VND/item because it did not meet the conditions for discount;
• The third time company B buys 1: it is eligible for a discount, so the company will get a 12% discount.

The total discounted amount: 660,000 x 10 = 6,600,000 is greater than the value of the final invoice (1 x 5,500,000 = 5,500,000 VND) and cannot be deducted from the final invoice, so an adjustment invoice must be created with a list of invoices for the first, second, and third times.

3. Case 3: Trade discount based on quantity and sales but the discount amount is established after the end of the program or discount period.

After the discount program ends, the seller will create an adjustment invoice with a list of invoices that need to be adjusted, the amount of the previously adjusted tax. In this case, the trade discount invoice is written similarly to the invoice in example 2 of case 2 above.

III. Some frequently asked questions when making trade discount invoices