n Professional Accountant - Claiming VAT on discount vouchers

Volume 2008 Number 1
  • ISSN : 1680-7537


Where discounts are given, the disclosure and recognition are important. Where the discount is un-conditional (a guaranteed discount given as a standard discount to a regular customer, regardless of the payment date), the value of the supply is simply less and no additional disclosure is required. Where the discount is conditional (e.g. a discount for paying within a prescribed period) the timing of the discount is important. The discount is only recognised once the condition is met (e.g. payment made within 30 days qualifies the customer for a percentage discount). If the discount applies in the same tax period in which the invoice is issued, the supply value is reduced (it is recognised as a reduced output tax liability). However, if the discount applies in a different tax period as that in which the invoice was issued, the full un-discounted value of the invoice is recognised for output tax, and the discount is an input tax deduction in the tax period the discount was given.

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