The inclusion of interest in installment sales in B2B transactions

Carlos Shinoda

Revista IPecege, 2015, vol. 1, issue 2

Abstract: Indirect taxes levied on company revenue are collected on fixed dates in the month following the month in which the respective taxable event occurred, regardless of whether the sale is made. Regarding these taxes, companies should pay attention to two main points: the date the taxable event occurred and the calculation of the financial or opportunity cost in sales on credit. The earlier in the month the invoice is issued, the greater the benefit for the supplier company's working capital management. In other words, if the sale is made in cash, the company will use the tax amount for a longer period to finance its working capital. In credit sales, charging a financial cost or opportunity cost on the cash invoice value will not produce the same net value adjusted to present value for the supplier. This is because indirect taxes are levied on the financial cost charged by the supplier in sales on credit, even though the dates for collecting indirect taxes are the same. However, according to the rules of Technical Pronouncement CPC No. 12, taxes levied on sales should not be adjusted to present value but rather maintained at their nominal value. In turn, the buyer pays taxes on the financial cost, but if they are recoverable, they will be credited for the amount paid. This article suggests formulas for the correct inclusion of financial cost or opportunity cost in installments.

Keywords: Financial; Economics (search for similar items in EconPapers)
Date: 2015
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