Dynamics Community Forum Thread Details

Withholding tax liability at vendor invoice posting (before vendor payment)

Hello everyone,

I’m trying to find a fully standard solution in Dynamics 365 Finance for recognizing withholding tax liability at vendor invoice posting stage, and not at vendor payment.

Business background:

In a few countries, withholding tax may be legally due and payable to the tax authority earlier than the actual vendor payment.

Because of this, recognizing withholding tax only at vendor payment is not compliant, as the tax liability must already exist at invoice posting time, even if the supplier is paid later.

What we already analyzed:

Global Withholding Tax only posts WHT at vendor payment / prepayment
“Estimate withholding tax amount on invoice” does not create a posted liability and is not visible in any inquiry
Advance payments / prepayments require a cash event, which does not match the legal requirement
Charges / markups can post at invoice time, but:
- they do not create a tax authority payable
- they distort vendor balance and VAT logic
Negative sales tax distort the invoice amount