Guidelines for Issuing Credit and Debit Notes

Credit and debit notes must be prepared in compliance with the Revenue Code because they are reported in the monthly VAT returns. This summary is to help companies understand how to correctly issue an accounting record that is frequently misused.

Keywords: Mazars, Thailand, Accounting, Credit Note, Debit Note, VAT, Tax Invoice, Revenue Code

10 September 2013

Credit Note

A credit note is issued to adjust or to amend errors in a sales invoice which has already been issued and sent to a customer.

Objective of issuing credit note:

Unit price overcharged
Goods returned or goods rejected by customer
Discounts given after the invoice is issued
Product wrongly shipped
To write-off customer short payments

Credit note should contain at least the following:

The document should be headed “Credit Note”
Name, address and VAT registration number of the supplier
Name and address of the customer
Date of issuing the credit note
Number and date of the original tax invoice
The reason for its issue (for example, “returned goods”)
Description of why this credit note is being issued
Show the correct pricing, quantity and product type
Total amount credited, excluding VAT
Rate and amount of VAT credited

Tip: The purpose of a credit note is not to credit an invoice that has not been paid by the customer.

Tip: The net amount should be the credit given to the customer, adjusted against the original tax invoice amount.

Debit Note

A debit note is similar to an invoice and is issued to increase the value of the sale of goods or services performed and its related VAT.

Objective of issuing a debit note:

Increase an undercharged tax invoice
Difference between billed and actual quantity of the invoice
Interest on late payment from customers

Debit note should contain at least the following:

The document should be headed “Debit Note”
Name, address and VAT registration number of the supplier
Name and address of the customer
Date of issuing the debit note
Number and date of the original tax invoice.
The reason for its issue (for example, “under billed”)
Description of why the debit note is being issued
Show the correct pricing, quantity and product type.
Total amount debited, excluding VAT
Rate and amount of VAT debited

Beware: Many companies simply re-issue the original invoice with an adjustment or issue an invoice for the incremental amount, rather than correctly issue a debit note.