Withholding tax on supplier invoices

How the amounts sit

The expense is recorded gross. The business incurred the whole cost; it simply paid part of it to a different recipient. The withheld portion credits withholding tax payable, where it stays until you remit it.

Recording the expense net of withholding understates costs and overstates profit, and leaves the withheld money in no account at all. That is the failure this arrangement exists to prevent.

Rates by category

Withholding rates are held per category in the organisation's tax settings. The shipped defaults are rent 8 per cent, services 7.5, works 5, goods 3 and commission 10, with zero for anything marked none.

An unrecognised category falls back to zero rather than to a guess. Over-withholding takes money from a payee that you then have to explain and return.

Paying the supplier

Payment of a matched invoice settles the total less the withholding. The withheld amount remains a liability rather than leaving the business.

Remitting

A remittance debits the liability and credits cash, and creates a remittance record with the period, reference and note so the payment over can be traced.

The platform refuses to remit more than the books say is owed. An over-remittance would leave a debit balance on a liability account, which is the same class of nonsense as a receivable in credit.

1. 1Open the tax position in the advanced finance area and read the outstanding balance.
2. 2Enter the amount, the period it covers, and the payment reference.
3. 3Record the remittance. It posts to the ledger and writes an audit entry.