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When selling at a discounted price, on which amount should VAT be calculated?
When selling at a discounted price, on which amount should VAT be calculated?
The company sells a fixed asset recorded on its balance sheet at a price below its residual (net book) value. In this case, on what amount should VAT be calculated? Can the difference between the residual value and the sale price be recognized as an expense?
According to the State Tax Service under the Ministry of Economy, for VAT purposes, the value of a taxable transaction is determined based on the amount (excluding VAT, but including other taxes, duties, and fees, except for road tax) received or to be received by the taxpayer from the customer or any other person.
When goods are sold at a discounted price, and this discounted price is more than 30% lower than the prices applied by the taxpayer to similar or identical goods (works, services) within 30 days, then for taxation purposes, the market price of the goods is taken as the sale price for VAT calculation.
According to Article 142.1 of the Tax Code, income from the disposal of assets is defined as the positive difference between the proceeds from the disposal and the value of the assets determined in accordance with Article 143 of this Code. For a person who disposes of assets free of charge or at a discounted price, the income is the difference between the market value of the asset and its value as determined under Article 143 of this Code.
According to Article 142.2 of the Tax Code, a loss arising from the disposal of assets is the difference between the proceeds from the disposal and the value of those assets as determined in accordance with Article 143 of this Code.
The company sells a fixed asset recorded on its balance sheet at a price below its residual (net book) value. In this case, on what amount should VAT be calculated? Can the difference between the residual value and the sale price be recognized as an expense?
According to the State Tax Service under the Ministry of Economy, for VAT purposes, the value of a taxable transaction is determined based on the amount (excluding VAT, but including other taxes, duties, and fees, except for road tax) received or to be received by the taxpayer from the customer or any other person.
When goods are sold at a discounted price, and this discounted price is more than 30% lower than the prices applied by the taxpayer to similar or identical goods (works, services) within 30 days, then for taxation purposes, the market price of the goods is taken as the sale price for VAT calculation.
According to Article 142.1 of the Tax Code, income from the disposal of assets is defined as the positive difference between the proceeds from the disposal and the value of the assets determined in accordance with Article 143 of this Code. For a person who disposes of assets free of charge or at a discounted price, the income is the difference between the market value of the asset and its value as determined under Article 143 of this Code.
According to Article 142.2 of the Tax Code, a loss arising from the disposal of assets is the difference between the proceeds from the disposal and the value of those assets as determined in accordance with Article 143 of this Code.