Supplier invoices subject to withholding tax can be posted in two ways: through third-party accounting or the purchasing module. Both methods can be used in the same environment.
1. Processing through third-party accounting
1.1. Tax rates
Go to Common data > Common tables > Tax rates and define the relevant rates. Set the tax type to “Withholding”.
Under accounting code, define the codes required to post the withholding amount to the appropriate account.
Important: The general ledger account must be defined as a “VAT account”. Enter the withholding percentage as a negative rate.
1.2. Entering a supplier third-party invoice
In Supplier third-party invoice, enter the purchase details. In the “VAT” field, open the context menu, select “Tax entry” and add the appropriate rate under “Tax 1” or “Tax 2”. The calculated withholding amount can be overridden if incorrect.
When the invoice is validated, the corresponding accounting entry is generated.
2. Processing through the purchasing module
Posting invoices with withholding through purchasing requires different configuration. A VAT setup is needed for each withholding scenario.
2.1. Tax level
Under Common data > Common tables > Taxes > Tax level, configure the item VAT level.
2.2. Tax rate
Define the tax rate as in the previous method.
Important: In this case, the source document states that an accounting code is not required and the rate must be zero.
2.3. Tax definition
Under Common data > Common tables > , link the tax level and tax regime to determine the applicable rate.
2.4. Invoicing elements
Under Setup > Purchasing > Invoicing elements, define the invoice footer elements used to record the supplier withholding.
Set the following: Direction: decrease; Type: rate; Default value: withholding percentage; Calculation basis: before or including tax, as appropriate; Tax level: the level which, together with the third party’s tax regime, determines the rate.
The accounting code linked to the invoicing element must contain the appropriate withholding general ledger accounts.
2.5. Entering a purchase invoice with withholding
In the invoice header, enter the total amounts, VAT and the negative withholding amount. Enter lines manually or from receipts, then check the totals on the “Control” tab.
The “Imp.pie.pdo” field is populated from the original purchase orders or must be entered to adjust the invoice. Once validated, the invoice is posted.