The Federal Tax Service (FTS) has issued clarifying Letter No. SD-35-3/11693@ dated 2 September 2026 addressing the tax treatment of income received by sellers operating on online marketplaces when the marketplace provides discounts to buyers at the seller’s request or initiative. The letter interprets Article 250 of the Tax Code (determination of income from sales) and Article 154 (VAT tax base) in the context of the tripartite relationship between seller, marketplace, and end consumer. The FTS confirms that the seller’s taxable income for both corporate profit tax and VAT purposes must reflect the full contractual price before the marketplace discount, not the net amount received after the discount. The marketplace’s discount constitutes a separate marketing expense for the seller, deductible under general rules subject to documentation requirements.
Key Takeaways
- Revenue Recognition at Gross Amount: Sellers must record revenue at the listed price agreed with the buyer. The marketplace discount (e.g., 10% off) does not reduce the seller’s taxable income. Instead, the seller incurs a commission or marketing expense equal to the discount amount, which must be supported by a marketplace report and an agency agreement specifying the discount mechanism.
- VAT Implications and Invoice Adjustments: For VAT, the tax base remains the full consideration. The seller issues an e-invoice for the full amount. The marketplace’s subsequent remittance of net proceeds (minus discount and commission) does not alter the VAT liability. However, if the marketplace acts as a tax agent under Article 161 of the Tax Code (for foreign sellers), the agent’s obligations are calculated on the gross sales value.
- Documentation and Transfer Pricing Risks: The FTS emphasizes that the discount expense must be economically justified and documented with a marketplace act of performed services. In related-party marketplace structures (e.g., seller and marketplace under common control), transfer pricing rules (Article 105.14) may apply, requiring benchmarking of the discount rate against independent marketplace commission levels to avoid profit shifting adjustments.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement