Withholding Tax

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

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

In cases where withholding tax is significant, it is best dealt with using a specialist system. AIQ caters to the occasional requirement to deduct withholding tax and comply with the legislation involved.

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 (Tax) 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

Setting up Tax Codes for Withholding Tax

You can set up Tax Codes and indicate that they are for withholding tax purposes:

1. Go to Setup > Code Maintenance > Taxes.
2. Set up or edit a tax code. 
   • Withholding: Tick this checkbox.
   • Withholding GL Account: Enter the General Ledger Account for gathering any withholding tax. Make sure the associated General Ledger Account is a Balance Sheet Account.
3. Click Save.
   
   

See:

  How do I use Code Maintenance to Control the Behaviour of the System? 

Contractor Payments

In some jurisdictions, for example, the USA, there may be a requirement to report on payments made to individuals or companies regarded as Contractors. AIQ can identify such suppliers as Contractors and produce the necessary Report.

Step One: Set country to United States

1. Go to Setup > Company Details & Settings.
2. In the Company Details tab, set your Country Name to the United States.
3. Complete any other details‍ and click Save.
   
   

Step Two: Enable the 1099 Code

1. Go to Setup > Codes Maintenance > Taxes. There will be an extra column, 1099 Code:
2. Click Edit against the codes which the Suppliers (Vendors) might use for billing. 
3. In the Edit Tax screen, tick the 1099 Code checkbox and click Save.
   
   

Step Three: Nominate Contractors

Setting this Code against a particular Supplier will record all Payments (i.e. Paid Invoices) made to the Supplier (Vendor) for reporting purposes.

1. Go to Purchases > Suppliers and open the relevant Supplier (Vendor) account.
2. In the Finance Settings tab, complete the Contractor Tax Code field.
3. Click Save.
   
   

Step Four: Make Invoices appear in the Report

1. Go to Purchases > Purchase Reports > Contractor Payments.
2. Complete:
   • From Transaction Date.
   • To Transaction Date.
   • Supplier(s): The list of suppliers you want to report on. 
   • Total Payments to Contractors Greater Than: Enter a lower financial limit for each Supplier (Vendor). This decides whether to include them in the Report.
     
     
      
3. When Invoices are paid and allocated, they will appear in the Report.
   
   

See:

  Reviewing Company Details & Settings and Defaults‍ 

  How do I use Code Maintenance to Control the Behaviour of the System?‍ 

  How do I Maintain Supplier (Vendor) Master Records?‍