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Trade discounts are given to try to increase the volume of sales being made by the supplier. The discount described as trade rate discount is sometimes called "trade discount". Trade discount is the discount allowed on retail price of a product or something. for e.g. Retail price of a cream is 25 and trade discount is 2% on 25.
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For example, U.S. rules impose a 20% penalty where the adjustment exceeds US$5 million, increased to 40% of the additional tax where the adjustment exceeds US$20 million. [77] The rules of many countries require taxpayers to document that prices charged are within the prices permitted under the transfer pricing rules.
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