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Withholding Tax Realized - Payment

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Posted on by EY-19060110-0

Hi Experts!

From my testing, I set Realized Withholding Type = Payment. Once i've posted Purchase Invoice with selected WHT Tax Bus. Posting Grp & WHT Tax Prod. Posting Grp, it will post to WHT Tax Entries with unrealized amount, example below.

However, when i apply payment to this invoice in Payment Journal, it shows no WHT Tax Entries will be posted. From my thoughts, i assume will post to WHT Tax entries upon posting the Payment in Payment Journal?

Do you have any ideas about it? Any setup do i missed out?

Thanks in advance!

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Mansi Soni 10,224 Super User 2026 Season 1 on at

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Hello,

In Business Central, when Realized Withholding Type = Payment, the system does not always create new WHT entries during payment posting. Instead, it depends on whether the withholding was already fully recognized at invoice posting and how the realization setup is configured.

In your case, since unrealized WHT entries were already posted at invoice level, the payment journal may not generate additional WHT entries it may only settle or reverse unrealized amounts to realized, rather than creating new entries. That’s why you see no WHT entries will be posted during payment.

You likely have no setup issue; this behavior is standard. You should check the Withholding Tax Setup (realization rules and posting groups) and verify whether realization is expected at invoice or payment stage for your configuration.

https://www.youtube.com/watch?v=d4mYltz4Zwg
https://yzhums.com/71463/

Hope this answer helps you!

If this answer helps you, kindly mark it as a verified answer

Regards,
Mansi Soni

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Saif Ali Sabri 2,791 Moderator on at

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Mansi's explanation is generally correct. When Realized Withholding Type = Payment, posting the purchase invoice typically creates an unrealized WHT entry. The actual realization of the withholding tax occurs when the payment is applied and posted.
A few things to verify:

Payment is applied to the invoice before posting (Applies-to Doc. No./ID is populated).

Withholding Tax Setup is configured for realization on payment and the related posting accounts are defined.

Check whether the system is updating the existing unrealized WHT entry to realized status rather than creating a separate WHT entry. Review the WHT Entries after payment posting to confirm the status change.

If you're using a localization or extension that provides WHT functionality, confirm its specific realization behavior, as some implementations do not create a new WHT entry at payment time.

If the invoice is fully applied and posted, but the unrealized WHT never changes to realized, then it is worth reviewing the localization/extension documentation and setup in more detail.

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EY-19060110-0 84 on at

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Hi Mansi & Saif,

Thanks for your explanation.

The system doesnt update the existing unrealized amount to realized amount, as well as doesnt create G/L entry to post to Payable WHT Tax Account (as setup in WHT Tax Posting Setup), after posting of Payment entry.

Besides, i notice there will no ticked for the field below in Payment Journal, wondering how is the condition for system to auto tick the field?

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Khushbu Rajvi. 23,132 Super User 2026 Season 1 on at

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Please cehck this:https://learn.microsoft.com/en-us/dynamics365/business-central/finance-setup-unrealized-vat

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Grigorios Mavrogeorgis 2,739 Super User 2026 Season 1 on at

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Hi, this looks like Thailand or a localization WHT setup, the exact behaviour depend on which app and version you have installed, so worth confirming that first.

From how realized = Payment is meant to work, the unrealized sits on the invoice after posting, and the realized WHT should move when you actually post the payment, not the moment you apply it in the journal. So the journal showing no WHT entries before posting can be normal depending on the localization, but i would verify by posting it in a sandbox and then checking.

What i would look at, the payment line itself need to carry the WHT, the WHT Bus. and Prod. Posting Group should populate when you apply the invoice. If those are blank on the line, nothing realize. Some apps also have a separate Post WHT step.

Did you post the payment and check WHT Tax Entries after, or only before? Which version you on?

Glad to help - follow up if anything is unclear.
► If this solved it, marking it verified helps others too.
Regards,
Grigorios Mavrogeorgis
Business Central Consultant & AL Developer
Work: Gmsoft Limited
Blog: insidebusinesscentral
LinkedIn: linkedin.com/in/gregorymavrogeorgis

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YUN ZHU 102,389 Super User 2026 Season 1 on at

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Hi, hope the following helps as well.

Business Central 2026 release wave 1 (BC28): Calculate withholding taxes for vendors (Withholding Tax)

https://yzhums.com/71463/

Thanks.

ZHU

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EY-19060110-0 84 on at

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Hi Grigorios,

Thanks for your explanation, i understood that system shall update the existing unrealized amount to realized amount after posted payment, but it didnt works in version is 28.1.49838

Besides, there is WHT Bus. Posting Group auto populate from Vendor card, however there is WHT Prod. Posting group = blank and which the field is non-editable.

There is no post WHT function in this apps.

Yes, i did posted payment entry and check, version is W1 28.1 (Platform 28.0.50938.0 + Application 28.1.49838.51100)

Thanks! :)

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OussamaSabbouh 18,276 Super User 2026 Season 1 on at

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Hello,

Yes, your understanding is correct: with Realized Withholding Type = Payment, the invoice creates the WHT entry as unrealized, then it should be realized when the vendor payment is posted/applied. If the payment journal says no WHT entries will be posted, first check that the payment line is actually applied to the invoice before posting, not just paying the vendor balance; also confirm the same WHT Bus./Prod. Posting Group setup has the correct Payable WHT Account Code and that WHT is enabled/setup correctly. If the payment is not applied to the invoice, BC may not know which unrealized WHT entry to realize. Microsoft states WHT can be calculated when paying a vendor invoice or when posting it, depending on setup.

Regards,
Oussama Sabbouh

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Jainam M. Kothari 17,045 Super User 2026 Season 1 on at

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Hello,

When Realized Withholding Type is set to Payment, posting a Purchase Invoice with the appropriate WHT posting groups will create a Withholding Tax Entry with an unrealized amount.

However, no additional WHT entry is automatically generated when the invoice is later paid through the Payment Journal unless the required withholding tax realization setup and processing conditions are met.

The key point is to verify whether all WHT configurations are correctly defined and whether Business Central is expected to create the realized WHT entry upon payment posting, as missing setup or localization-specific requirements may prevent the withholding tax from being realized at the payment stage.

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EY-19060110-0 84 on at

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Hi Oussama,

I have checked the payment applied to the relevant Posted Purchase Invoice, however when i drill down to see WHT Bus. & Prod. Posting Grp in Payment Journal line, system only bring WHT Bus. Posting Group forward from Posted Purch. Invoice but no WHT Prod. Posting Grp... I would suspect is this causing the posting result not as what we expected?

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