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.

Withholding Tax and VAT Returns

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 

In some jurisdictions, for example, the USA, there may be a requirement to report on payments made to individuals or companies regarded as contractors. Our system 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. 
   
2. Click Edit against any tax code the Vendors might use for billing. In the Edit Tax screen, tick the 1099 Code and click Save.

Step Three: Nominate Contractors

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

1. Go to AP > Suppliers and open the relevant account.
   
2. In the Finance Settings tab, complete the Contractor Tax Code field. For details on any other fields, see Managing Supplier Master Records.
3. Click Save.

Step Four: View the Contractors Payments Report

When Invoices are paid and allocated, they will appear in the Report.

1. Go to Reports > Report Manager.
   
2. Select Purchase Reports > Contractor Payments.
3. Complete the following:
   • 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.

See:

Managing Default Settings 

Using Codes Maintenance 

Managing Supplier Master Records