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How to handle withholding tax
08-24-2016, 03:15 AM,
#1
How to handle withholding tax
Hi,

The law in my jurisdiction requires that 6% withholding tax is charged for services
but our company is not authorized to collect withholding tax for the revenue authority

So what happens is that we invoice the customers for services without adding the tax amount and when they pay the invoice they deduct 6% for the withholding tax.

e.g services invoice = 1000 , 6%WHT = 60 , the customer pays 940

So in our receivables it reflects 60 as unpaid by the customer

What would be the best way to handle this situation so that we don’t have the 60 hanging in our receivables


Thanks in advance



r2-g
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08-24-2016, 06:32 AM, (This post was last modified: 08-24-2016, 06:33 AM by phil.)
#2
RE: How to handle withholding tax
Is this a bug in the system?

In this situation I would use the prompt payment discount when entering the receipt ... and either:
1) change the account that prompt payment discount gets posted to - to witholding tax expensed. See Company Preferences - Payment Discount GL account.
OR
2) do a GL journal from the payment discount GL account to witholding tax expensed GL account.


This seems more like general accounting advice!
Phil Daintree
webERP Admin
Logic Works Ltd
http://www.logicworks.co.nz
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08-26-2016, 03:55 AM,
#3
RE: How to handle withholding tax
(08-24-2016, 06:32 AM)phil Wrote: Is this a bug in the system?

In this situation I would use the prompt payment discount when entering the receipt ... and either:
1) change the account that prompt payment discount gets posted to - to witholding tax expensed. See Company Preferences - Payment Discount GL account.
OR
2) do a GL journal from the payment discount GL account to witholding tax expensed GL account.


This seems more like general accounting advice!

Thanks Phil,

No. 1 should would work fine in my situation

R-2g
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