Physical discount is a kind of commercial discount.

For example, enterprises in order to encourage buyers to buy more goods, stipulate that 10 pieces are sold to 1 pieces, 50 pieces or 10 pieces to 2 pieces.

Since commercial discounts have occurred at the time of sale, the current financial system requires enterprises to determine sales revenue after deducting the net amount after deduction of commercial discounts, so that no accounting treatment is necessary.

According to the existing tax law, taxpayers sell goods by discounts. If sales and discounts are separately stated on the same invoice, the value added tax can be levied according to the sales after the discount. If the discount is invoiced separately, no matter how it deals with the financial affairs, the discount will not be deducted from the sales volume.

This provision of tax law is considered from the perspective of price discount, and does not include physical discount.

The sale method of physical discount is in essence the free gift of goods to others.

According to the fourth provision of the detailed rules for the implementation of the Provisional Regulations of the People's Republic of China on value added tax, the goods are donated to others without any compensation. Whether the goods donated are manufactured by themselves or commissioned by others, they should be regarded as the value of sales goods.

That is to say, in general, the sale of goods in the form of physical discounts shall be considered in accordance with the regulations.

However, if the physical discount is converted into a price discount, reasonable tax planning can be carried out.

For example, a customer who buys 10 items should be given a 1 discount. When Invoicing, the quantity and amount of sales will be issued according to the 11 sales items. Then the 1 discount will be given in the red letter on the other line of the same invoice.

After such treatment, according to the relevant provisions of the tax law, the discount part can be deducted from the sales tax when calculating the tax, without calculating the value added tax and saving the tax expenditure.

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