On 27 May 2020, Binh Duong Tax Department issued Official Letter No. 11547/CT-TTHT guiding the Personal Income Tax (“PIT”) on trade discount, with detail as following:
When the company signs a contract for purchases and sales of goods with an individual and in the contract there is a term that the trade discount is directly deducted in the invoice, does not in form of agency commission or a promotional bonus as defined under the Commercial Law, then the above mentioned trade discount is not subject to PIT. The company is not required to withhold PIT when making such trade discount.
When the individual is a sales agent and receives the trade discounts paid by the company in cash (not directly deducted in the invoice), then such discount is subject to PIT at the rate of 1%. The company shall declare and make payment on behalf of an individual using the form No. 01/CNKD (prescribed in Circular 92/2015/TT-BTC) to the tax office where the company is headquartered. On the tax dossier and tax receipts, the taxpayer is the individual that earns incomes from business.