Considerations in the retail sector – revenue or reduction of costs?

Abstract

This paper aims at identifying the most common forms of considerations given by vendors to customers as well as the accounting and taxes implications of this commercial act. It emphasizes that there are no rules established in the current Brazilian norms of accounting about the treatment and register of specific kinds of commercial agreements often made by these companies. As a result of this gap, such companies, in many circumstances, treat these considerations as revenues and, therefore, pay taxes and social contributions, which, as it will be verified, is not always necessary. Besides, these companies also fail on following the correct accounting recognitions for the essence of these transactions. The aim of this study is not only to highlight the importance and the complexity of this subject, but also to present some accounting suggestions, although not meaning to exhaust them, taking as a base the procedures already adopted in other countries, the Brazilian taxes legislation, and the Brazilian Generally Accepted Accounting Principles. This paper is concluded with the recognition that considerations are important instruments of purchase to vendors, but in order to recognize them correctly in the financial statements, the companies must formalize these agreements and adopt some instruments of control for identification and association of their considerations to the purchased vendors products.