Witholding tax on customer payment.

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Posted on by Harisgillani

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Hi Experts,

Any body have idea how i can use withholding tax functionality on customer payment. According to my research this funtionality is country specfic and available in brazil region. If this is the case then any body can help me to enable this functionality withholding tax on customer payment.

Your reply will be appreciated.

Regards

Haris Gillani

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Ludwig Reinhard Microsoft Employee on at

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Hi,

What do you want to withhold from customer payments? Doesn't the customer who pays you withhold that tax already?

Would be great if you could explain a bit more of that process and the underlying tax regulation.

Many thanks

Ludwig

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Mahmoud Hakim 17,887 on at

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You can check this link

www.axpulse.com/tax-withholding-on-customer-payments-in-microsoft-dynamics-ax-2012

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Ludwig Reinhard Microsoft Employee on at

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Hi Mahmoud,

This link leads to an expensive isv solution. Why is that?

Best regards

Ludwig

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Harisgillani 291 on at

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Hi Ludwig Reinhard,

Actually as a customer we withhold vendor sale tax at time of payment and pay after withhold sale tax same like as a vendor my customer can withhold portion of sale tax and pay after withhold sale tax.

Regards,

Haris Gillani

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Harisgillani 291 on at

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Hi Mahmoud Hakim,

i already visited this link this lead me to ISV solution.

Regards

Haris Gillani

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Mahmoud Hakim 17,887 on at

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Hi Ludwig

This is just suggesting to check this ISV features.

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Ludwig Reinhard Microsoft Employee on at

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Hi Haris Gillani,

Have you tested whether this issue can be fixed by making use of the use tax functionality?

In Europe we use it commonly for EU purchases where we have to record the incoming VAT but are not paying it. This is setup by a second sales tax posting line that basically offsets the first one and prevents us from paying the amount to the vendor.

Are you familiar with this tax setup?

Have you tested using it also for your customers?

Best regards,

Ludwig

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Harisgillani 291 on at

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Hi Ludwig Reinhard,

i did not use this functionality as my knowledge its just to record tax as expense which can not be claim to tax authority and its not applicable in my case. My scenario is if customer withhold sale tax on goods that we sell him. This is the vice versa of withholding sale tax on vendor payment as we do.

Regards

Haris Gillani

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Ludwig Reinhard Microsoft Employee on at

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Hi,

Here is a Workaround:

Step1: Record the payment

Step2: Enter a payment fee

Resulting voucher:

Your bank account increases by 990 usd in my example here. the 10 usd is posted on a ledger account for withholding tax.

Is that on option for you?

Best regards,

Ludwig

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ZvikaR 168 on at

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Let me try to reiterate and see if I understand the details

you issue a customer invoice for $100 + $20 tax (20%)

customer will withhold 15%, and will only pay you $105 (so $100 + 5$ of remaining tax?

If that's the case I have seen this done by using sales tax/VAT configuration.

On the sales order you select ST group/Item ST group which results with 2 sales tax codes.

One with 20% (set to post into "sales tax collected" account)

One with -15% (set to post into "sales tax withheld" account)\

The invoice total will be correct, and your tax records will reflect accurately the transaction.

This is actually a normal practice in a couple of EU countries, including Spain.

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