On occasion you may have to withhold tax on a transaction, such as:

• Payment of a Dividends.
• Payment of Interest to a non-resident.
• Withholding of Rental Income from a non-resident landlord.

Submitting Withholding Tax

Submitting Returns for withholding taxes to the relevant Tax Authorities is by way of varying supplemental or alternative Forms depending on the type of Withholding Tax involved. Transactions that carry the relevant VAT Code will automatically be excluded from the standard VAT Return. The withheld amount will be directed to the nominated General Ledger Account associated with the Withholding Tax Code.  

See:

 Corporate - Withholding taxes

Designate a Tax Code for withholding tax purposes as follows:

1. Go to Setup > Codes Maintenance > Taxes.
   
2. Set up or edit a tax code, referring to Using Codes Maintenance and ensuring the following are selected: 
   • Withholding: Tick to treat this tax code as a withholding rate for purchases.
     • For Purchase Transactions, the withholding tax amount will be calculated and posted to the nominated Withholding Tax GL Code, but the invoice will not appear in the VAT return screen. 
     • For Sales Transactions, the withholding tax amount will be calculated from the net amount and credited to the nominated Withholding Tax GL Code and will not appear in the VAT return screen.
   • Withholding GL Account: Select the GL account to which to post the Withholding Tax. Make sure the associated General Ledger Account is a Balance Sheet Account. The Withholding tax amount will not be posted against the VAT on Purchases GL Code.
3. Click Save.

See:

 Using Codes Maintenance