Skip to main content

How do I set up withholding tax on payments?

Make a Withholding Tax code per section and rate kind, give it an account on the withholding tax Posting Profile, and mark the right code as default on each vendor (and customer). Payments then offer the deduction by themselves.

Screen
Tax Controlling › Withholding Tax; General Ledger › Posting › Posting Profile
Who
The tax accountant
Takes effect
For payments dated in the rate's range
Needs first
The withholding tax payable account released

Steps​

  1. Withholding Tax: code, name, Apply On, Withholding for, rounding, value lines. Release it.
  2. Posting Profile, category withholding tax (the default profile): lines with post keys W01 and W02, the code in Tax Code, and the payable account.
  3. On each vendor or customer mark the code as default (see Release Vendor In Legal Entity and the Withholdings tab of Customer In Legal Entity).

Check it worked​

  • A vendor payment shows the withholding line with the rate and amount; the Withholding Transaction list shows it after Save.

If something looks wrong​

  • No withholding comes up on the payment. No default code on the payee, no rate line for the date, or no posting profile line for the code.