Withholding Tax on Payable Invoices

Tax can be withheld for part or all of a Payable invoice.

Note: Before using the Withholding Tax feature, the following need to be set up in your org:
  • Withholding Tax Code and associated Tax Rate
  • Withholding Tax General Ledger Account

For more information, see About Tax.

Withholding Tax for All of a Payable Invoice

How Withholding Tax is calculated on an entire Payable Invoice:

In this example, the payable invoice has a Net Total of 1500, the VAT rate is 21% (315), The withholding rate is 15% (-225) and the invoice total is 1590.

Field

Tax Rate (%)

Value
Net Total N/A 1500
Tax Total 21 315
Withholding Total 15 -225
Invoice Total N/A 1590
Note: The Totals are updated when the document is saved.

The Withholding Total is the amount payable against the credited income as income tax during the year.

To add Withholding Tax information to a payable invoice.

  1. In the Withholding Tax field, click .
  2. Select the correct Withholding Tax Code.
  3. [Optional] In the Withholding Rate field enter a value to override the default tax rate set on the selected Withholding Tax Code or leave the field blank to accept the default Withholding Tax rate.
  4. Click Save.
Note: The Totals are updated when the document is saved.

Excluding a Payable Invoice Line Item from Withholding Tax

How Withholding Tax is calculated on a Payable Invoice that has a line excluded from Withholding Tax:

In this example, the payable invoice has a Product line ‘professional service’ of 1000, an Expense line of 500, the VAT rate is 21% (210), The withholding rate is 15% (-150) and the invoice total is 1560. The Expense Line is excluded from Withholding Tax and VAT.

Field

Tax Rate (%)

Value
Product Line ‘Professional Services’ N/A 1000
Expense Line ‘Expenses Supplied’ N/A 500
Tax Total 21 210
Withholding Total 15 -150
Invoice Total N/A 1560
Note: The Expense Line in the example above (Expenses supplied, "Suplidos") is typically used in Spain. The totals are updated when the document is saved.

On the relevant payable invoice product Line or expense line item.

  1. Select the Exclude from Withholding checkbox to exclude the payable invoice line item from withholding tax.
    1. Click Save.

Reporting on Withheld Tax

Accounting Reporting Expansion Pack users can use the Withholding Payable Invoice report in the Withholding Reports folder. This report displays payable invoices where tax is withheld. For more information about reports, see Reports Home.

Notes: To access the reports your administrator must either:
  • Enable "View Reports in Public Folders" for your profile.
  • Share the Withholding Reports folder with you.
  1. Go to the Reports tab.
  2. Click All Folders | Withholding Reports | Withholding Payable Invoice.