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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Effect of cash discount
Let’s assume one company sells product with cash discount to another company …And the first company charge the second one less Vat because of discount and the second company buys product without taking discount offered paying less VAT.
So The question is What does this process change?
Is it —The second company will have to claim less and paying more to the tax man after resaling product…In general it doesn’t change anything but it takes more time than usual for government to collect sales tax..
Thank you…
Sales tax is calculated on the amount after all discounts, whether or not the cash discount is taken.