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TREATMENT OF WITHHOLDING TAX IN SL
BACKGROUND
Withholding tax is a form of income tax deducted at source by one person upon effecting a payment to another.
The withholding agent (person effecting the payment) is supposed to make the payment of tax.
The payer must remit to the Tax Authority the tax withheld on or before the 15th day of the month following the month in which the payment subject to withholding tax is made.
The withholding agent is required to keep the records of payment and withholdings for 5 years.
The tax rates are usually a percentage on the gross amount (one million shillings and above) depending on the Source
EXAMPLE
A vendor (XXXX) offers services or supplies goods to an entity worth Shs.1,500,000
The rate charged on WHT is at 6%
The entity pays less 6% to the vendor (XXXX) (Shs.1,410,000)
The 6% is then remitted to the tax authority a vendor also (YYYY) (Shs. 90,000)
REQUIREMENT
How can we configure this functionality in Dynamics SL?
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Hello STEPHEN K, you could use a negative tax rate, in your case -6.00. When you register the bill for the whole amount 1,500,00, the system will create a voucher for 1,410,00 which you'll pay to the vendor and will debit the expense account 1,500,000 and debit the tax account -90,000.
That how we do it in Mexico.
Stephen,
There's no standard functional feature for handling withholding tax in Dynamics SL. You either have to customize the functionality or make use of work arounds like entering debit memos to offset the WHT amount at the point of payment.
If you're not using the discount field in your transactions, I have a customization that has been developed to handle WHT but it makes use of the discount field. Let me know if you're interested.
Dan.
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André Arnaud de Cal...
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