Are free services or discounts given to clients tax deductible?

No, free services are not deductible. When filing as Self-Employed, you pay taxes based on your sales minus your expenses.

Think of it this way, if you were paid for the service, you would pay tax on that income. Since you received no income for that service, you don't have to pay taxes on it.

Or another way...you could charge and receive money (and include it in your sales), but turn around and give the money back to the client as a "marketing expense". It's the same thing in the end -- a wash both ways.

Question: If a business does not collect sales tax from the customer, is that tax deductable as a business expense?

Thank you.