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This text refers to program version 8.1  

Withholding Taxes in the Purchase Ledger

The Withholding Tax feature is available in the following countries (determined by the VAT Law specified in the Company Info setting): Angola, Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, El Salvador, Guatemala, Honduras, Italy, Kenya, Mexico, Nicaragua, Panama, Philippines, Portugal, Paraguay, Singapore, South Africa and Uruguay. The settings and options described on this page will not be visible elsewhere.

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In some countries, it is necessary to calculate and apply a Withholding Tax when paying some or all Purchase Invoices. The Withholding Tax amount will be subtracted from the outstanding Purchase Invoice total and paid directly to the tax authority or other government institution.

Standard ERP offers three methods for calculating and accounting for Withholding Tax:

  1. Withholding Tax can be calculated in and posted to the Nominal Ledger from Purchase Invoices. The calculation can be manual or automatic.

  2. Withholding Tax can be calculated in and posted to the Nominal Ledger from Payments with manual intervention. If you use this method, after you list Purchase Invoices in a Payment, you will need to select 'Calculate Withholding Taxes' from the Operations menu. This will add extra rows to the Payment for the Withholding Tax payments. When you mark the Payment as OK and save it, records will be created in the Withholding Certificates setting. You will be able to print Withholding Certificates and send them to your Suppliers with payments. This method should be used in Argentina.

  3. Withholding Tax can be calculated in Purchase Invoices and posted to a temporary Account. When you pay the Purchase Invoices, Withholding Tax will be moved from the temporary Account to a final Account. This method can only be used in Mexico and is only briefly mentioned in this manual.
Follow these steps to configure the Withholding Tax feature in Standard ERP. All the settings mentioned can be found in the Purchase Ledger:
  1. If you would like Withholding Tax to be calculated automatically in Purchase Invoices, specify a Withholding Tax Account in the Account Usage P/L setting, and choose the Calculate Withholding Tax option in the Purchase Invoice Settings setting.

    Do not complete this step if you will be adding Withholding Tax manually to Purchase Invoices or if you will be posting it from Payments.

  2. Use the Withholding Calculation Formulae setting to define the formulae that will be used to calculate Withholding Tax amounts.

  3. In the Withholding Taxes setting, configure the various Withholding Tax regimes that you will use. In a particular tax regime, you should specify a Calculation Formula, the Nominal Ledger Account to which the Withholding Tax amounts will be posted, the Form Template that will be used when you print a Withholding Certificate and various other attributes.

  4. In the Supplier Withholdings setting, connect each Supplier to one of the Withholding Tax regimes created in step 2.
Please follow the links in the individual steps 2-4 for more details, and refer here for illustrated examples .

If you will be adding Withholding Tax manually to Purchase Invoices, you only need complete step 3.

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The Payment register in Standard ERP:

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