Understanding VAT on Trade and Cash Discounts: Key Rules for Businesses

• Trade discounts given at the time of sale and without conditions can be excluded from the VAT base.
• Cash discounts or conditional discounts given after the sale cannot be deducted from the VAT base; VAT is calculated on the full selling price.
• The Revenue Department ruled that conditional discounts (e.g., government subsidies or refundable deposits) do not qualify as trade discounts for VAT purposes.
• Only commercial credit notes without VAT can be issued for post-sale or conditional discounts; VAT credit notes are not allowed.
• To exclude a discount from the VAT base, it must be unconditional and granted at the time of sale.

Source: pkfthailand.asia

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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