A trade discount is a reduction to the listed price of a product due to commercial considerations such as promoting larger orders (increase in quantity), early payment incentives, cash payment incentives or discounts given in lieu of different trade levels (i.e. distributor, retailer, etc.).

 

Bona fide trade discounts given by the supplier is accepted by Customs and should be excluded in the computation of GST.

 

Please request for a letter of explanation from the supplier to provide full details of the discount. If the type of discount was clearly stated in the invoice, you will not be required to obtain a letter of explanation.