Instructions for declaring VAT on commercial discount invoices

Instructions on how to declare VAT when issuing commercial discount invoices, issuing sales discount invoices. There are specific examples and images for each case.

I. Legal basis

– Circular 200/2014/TT-BTC

– Circular 133/208/TT-BTC

II. What are trade discounts, sales allowances, and sales returns?

• Trade discount (CKTM) is a form of price reduction when customers buy goods in large quantities.
• Sales discounts are deductions from the selling price given to buyers due to poor quality or incorrect specifications of goods sold.
• Sales returns are goods and services returned by the buyer during the period.

III. How to declare VAT, account for commercial invoices, and reduce sales prices

1. Accounting, declaring VAT, discount invoices, sales discounts

➤ If the enterprise accounts according to Circular 200, account 521 reflects revenue deductions.

• Account 5211 – Trade discounts;
• Account 5212 – Returned goods;
• Account 5213 – Sales discounts.

➤ If the enterprise accounts according to Circular 133, account 511 reflects revenue deductions.

2. Declare VAT on commercial discount invoices

➤ Case 1: Trade discount at the time of sale when the customer purchases the required quantity, the amount on the VAT invoice has been discounted for the customer.

For example:

fdiinvietnam.com company sells shirts. In May 2022, the company ran a program to buy 10 shirts and get 1 free for customers (the selling price of 1 shirt is 1,000,000 VND/shirt). fdiinvietnam.com declares quarterly:

• On May 1, 2022, Company B bought 8 shirts.
• On May 10, Company B bought 2 more shirts from fdiinvietnam.com and received a discount.

Company B receives a discount directly on the selling price (deducted directly from the sales invoice).

➨ How to account for trade discounts of fdiinvietnam.com (seller):

– On May 1, fdiinvietnam.com issued a sales invoice with the value: 8,640,000 VND (including VAT).

– On May 10, issue a sales invoice with the following value: 

– On May 10, fdiinvietnam.com recorded: 

Debit account 111,112,131: 1,080,000;

Credit account 511: 1,000,000;

There is account 3331: 80,000.

➨ Accounting method of Company B (buyer):

– Upon receiving the invoice on May 10, Party B accounts as follows:

Debit account 156: 1,000,000;

Debit account 1331: 80,000;

Credit account 111,112,331: 1,080,000.

➤ Case 2: If you purchase multiple times and reach the required quantity and apply a discount at the end of the program.

For example:

• fdiinvietnam.com issued 2 sales invoices, one for 8 shirts and one for 2 shirts, with the value of 2 invoices being 10,800,000 VND (including VAT).
• fdiinvietnam.com issues an additional discount invoice when performing a discount for party B.

➨ fdiinvietnam.com declares negative output VAT in item 8% and accounts as follows (seller):

Debit account 511: 1,000,000 (according to Circular 200, it is recorded in Debit account 521);

Debit account 3331: 80,000;

Credit account 111,112,131: 1,080,000.

➨ Company B declared negative input VAT for the second quarter of 2022 (because May and June are in the same declaration period). 

– If the goods are still in stock, company B will reduce the inventory value:

Debt 331,111,112: 1,080,000;

There are 156: 1,000,000;

There are 1331: 80,000.

– If the item is sold out:

Debt 331,111,112: 1,080,000;

There are 632:1,000,000.

There are 1331: 80,000.

>> See more: How to declare invoices and account for returned goods

IV. Questions about declaring VAT on commercial discount invoices and sales discounts