Revenue – ifrs 15 handbook

Example 34 – Payments to customers: Volume rebates
Media Company M provides advertising space to companies on its internet 
platform. M enters into a contract with Advertising Agency B for the referral of 
B’s customers to M. Under the contract, B is entitled to a commission of 10% 
of M’s billings for the use of its advertising space by B’s customers. To secure its 
market share, M also agrees to pay a volume rebate directly to B’s customers 
(i.e. the end users of the advertising space) if certain advertising volumes are 
met during an annual period.
M considers that it does not receive any distinct good or service in exchange 
for the payment of volume rebates to B’s customers and therefore accounts for 
them as a reduction in revenue. M’s accounting for these volume rebates is not 
impacted by its assessment of whether they are consideration payable to its 
customer or its customer’s customer.
3.5 
Sales taxes
IFRS 15.47, BC188B
Revenue does not include amounts collected on behalf of tax authorities – e.g. 
some sales taxes, excise duties or value added taxes (VAT). The amount of taxes 
or duties may be computed as a percentage of either the selling price or the 
production cost.
To determine how to account for sales taxes or duties, an entity assesses whether 
it is primarily obligated for payment of the taxes or whether it collects the amount 
from the customer on behalf of the tax authorities. This determination is made 
based on an analysis of the local regulatory requirements.

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3 Step 3 – Determine the transaction price | 89
3.5 Sales taxes
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The accounting for sales or excise duties may vary depending on the different tax 
regimes in various jurisdictions. This might lead to different accounting for different 
sales or excise duties by entities within a multinational group. Depending on how 
the legal or regulatory requirements are applied, the determination of whether 
an entity is primarily responsible for the tax may require significant judgement. 
It appears that if excise taxes are significant, then the entity should disclose the 
judgements made and the line item(s) in which amounts are included, if applicable.