Withholding Tax on Sales Credit Notes

Tax can be withheld for part or all of a sales credit note. This functionality is also compatible with intercompany transfers.

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 Sales Credit Note

  1. Go to Sales Credit Notes.
  2. Select the sales credit note which you want to withhold tax for.
  3. Click Edit.
  4. In the Credit Note Detail section click in the Withholding Tax field.
  5. Enter the correct Withholding Tax code.
  6. [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.
  7. Click Save.
Note: The totals are updated when the document is saved.

Example of Withholding Tax on Entire Sales Credit Note

In this example, there is a Net Total of 3000 and the VAT rate is 21% (630). The withholding rate is 10% (-300) and the invoice total is 3330.

Field

Tax Rate (%)

Value
Net Total N/A 3000
Tax Total 21 630
Withholding Total 10 -300
Credit Note Total N/A 3330

Excluding a Sales Credit Note Line Item from Withholding Tax

  1. Go to Sales Credit Notes.
  2. Select the sales credit note in which you want to withhold tax on a line item.
  3. Click the Related tab.
  4. Click the Sales Credit Note Line Item ID.
  5. Click Edit.
  6. In the Product section select Exclude from Withholding.
  7. Click Save.

Example of Withholding Tax at Line Item Level

In this example, there is a line item Computer (1000), a line item of TV (500), and the VAT rate is 21% (315). The withholding rate of 10% (-100) is only selected for Computer.

Field

Exclude from Withholding

Tax Rate (%)

Value
Line Item - Computer Selected N/A 1000
Line Item - TV Deselected N/A 500
Tax Total N/A 21 315
Withholding Total N/A 10 -100
Invoice Total N/A N/A 1715

Creating a Credit Note from a Sales Invoice

Once a sales invoice has been posted, you can use it to begin to create a credit note.

Converting a Sales Invoice That Contains Withholding Tax Information to a Sales Credit Note

A sales credit note converted from a sales invoice will inherit the Withholding Tax information.

For more information, see Creating a Credit Note from a Sales Invoice.

Reporting on Withheld Tax

Accounting Reporting Expansion Pack users can use the Withholding Sales Credit Note report in the Withholding Reports folder. This report displays sales credit notes 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 Sales Credit Note.