About Payment and Tax Discounts
If you have opted to allow entering discounts on invoices (in the AR Company Parameters form), the system calculates payment discounts automatically for each invoice line entered.
Contract invoice - the contract's payment terms
Non-contract invoice - the customer's payment terms
If you have specified to allow tax discounts (option in AR Company Parameters), and you allow entering discounts with invoices, a tax discount will be calculated once the discount amount is calculated. The tax discount is a calculation of the discount amount times the tax rate (specified for the line's tax code). So, for example, if you have an invoice for $100, with $5 tax (5%) and a discount of $3 (3%), the calculated tax discount would be $.15 (5% x $3).
For more information about payment discounts and tax discounts, see Discounts.