Question:
Our company has customers who request to receive early payment discounts when they pay their outstanding invoices on time as per the contract. However, according to the definition of early payment discounts: ‘Early payment discount is the amount that the seller deducts for the buyer when the buyer pays for the goods before the contract due date.’ So, if our company agrees to pay the early payment discount to customers for paying their outstanding invoices on time as mentioned above, can this early payment discount amount be properly accounted for as a legitimate expense and be recognized as an expense deductible when calculating corporate income tax (CIT)?
Answer:
Based on Article 4 of Circular No. 96/2015/TT-BTC dated June 22, 2015, of the Ministry of Finance, which guides corporate income tax (CIT) and amends and supplements Article 6 of Circular No. 78/2014/TT-BTC dated June 18, 2014, of the Ministry of Finance, guiding CIT: In cases where a company has a contract for selling goods to customers with an agreed early payment discount, the company can include the payment discount amount and the payment discount payment document as deductible expenses when determining CIT.
