I am using the cloud version 21.9.15. I expect the invoice total column to show 883,414 (highlighted in red i.e. the gross invoice amount and before WHT) and the balance due to be 843,660.37. @lubos please look into this and advise.
Extract from sales invoices tab
Sale invoice # 7471
The Sales Invoice tab shows the original amount due and the amount currently due
what Manager is displaying is the exact amount your customer owes you.
they are liable to pay you only 843660.37
the withholding tax amount 39753.63 is paid to the tax authorities directly by your customer. therefore, Manager is displaying the actual amount you will be receiving since the customer is not going to pay you the tax amount.
I understand this. I am simply inquiring as to why this doesnât show the gross sales invoice amount. In the sales invoices tab, I expect to see the gross sales invoice amount and not the net (after WHT). I prefer to see the amount that is recorded and reported as sales.
In addition to this, I also note that in the reports section, the report sales invoice totals by the customer also shows the net amount (i.e. after WHT) and not the gross amount. Again, for analytical purposes, If I am reviewing the sales invoice totals by customers, I want to see the gross sales invoice amount and NOT the net.
The gross amount shows in the Summary page and in the P & L report so I agree that the reporting is inconsistant
the inconsistency is because the P&L report calculates the figures on line items basis.
i am not sure it would be possible to modify the reporting because there maybe situations where withholding taxes are not applicable to all line items in an invoice.
Because a sales invoiceâs gross amount is the total obligation the customer has to you, not the total amount of sales. The total of sales will be included in the relevant income accounts on the profit and loss statement. Withholding tax reduces the initial obligation and its contribution to Accounts receivable. This is distinctly different from a receipt against the invoice, which reduces the balance due, but not the initial total owed. Under a withholding tax regime, the customer never owes you the amount of withheld tax. That tax is owed to the tax authority from the outset, on your behalf.
Thanks, @Tut. The sales invoices tab is not the same as the customers tab where you get to see the balances that are due from customers. IMO, technically speaking, the sales invoices tab should show the gross amounts and not what the customer owes.
I believe this boils down to how the developer @lubos has decided to implement it and this differs from my personal preference. Again, I would expect sales report totals by customer should be the same as the sales amount that is reported in the profit and loss account. Currently, this is not the case.
You have put your finger directly on the key fact. The Sales Invoices tab is not a sales report. Its tab listing displays data about the sales invoices themselves.
If you want information about sales totals, the proper place to start is the profit and loss statement. Drill-downs and customer searches will produce information by customer that can be copied to spreadsheets. If you want more specificity, custom reports are available.
Iâm of the view that âInvoice Totalâ is the total invoice amount. The amount net of withholding tax should be called âNet Invoice Valueâ or something more appropriate.
This is also carried into the Sales Order tab which wrongly calls the âNet Invoiceâ amount The âInvoicedâ Amount.
Working with the Amount net of tax (Net Invoice) as âSales Invoiceâ or âInvoicedâ amount means mathematically the order never gets fulfilled. From the example above, you can see that the Invoiced amount will never match Sales order amount because the sales order shows the âGross Amountâ and the invoice amount shows the âNet Invoiceâ amount.
I have mentioned here Status of quotes, Sales Orders and Purchase Orders Idea - #56 by Abeiku in response to this Sales Order: invoiced amount ignores withholding tax
I believe we should shift to working with the Gross amounts instead. Whenever sales invoices totals are reported anywhere in the program, they should be reported at 100%.
Withholding tax isnât part of the original value of the invoice. The fact is this 39,753 is money that you already disclaimed much like discount and itâs treated as such
The withholding tax is not part of your sales, itâs not part of your tax obligations and itâs not part of the receivable to be collected.
Imo, the invoice value should be equal to what you originally claim which is the total less discounts and withholding tax.
@Ealfardan I disagree, withholding taxes are taxes paid on account. Tax authorities use it to reduce revenue loss due to non-payment, it is not to be taken as some reduction. If it were to be treated as some discount/reduction, the sales amount recorded in the income statement would be treated as net of the âreductionâ.
But the sales are reported at gross.
Secondly, @Tut @Ealfardan, it is wrong to say the amount receivable is the amount net of withholding tax amount. The amount deducted at source is receivable until a withholding tax certificate is provided by the party who did the deduction, ONLY then do we move this receivable to an asset account as Receivable Amount Received in the form of tax credit (as perfectly implemented in Manager).
Not every user has access to the P/L report. The Sales Invoice Tab must present sales amounts correctly (Gross Amounts)
Sales invoice tab displays data about sales invoices except for showing the gross invoice amount. Itâs important that sales invoice tab shows what is invoiced & reported as sales in P&L.
Users should not have to develop custom reports where default reports are available such as sales report total by customer. Would be great to hear @lubos thoughts on this.
There are some misconceptions here:
Withholding taxes are never received or paid by the seller and hence the term withheld.
The buyers either pays the authorities directly, pays a government trustee for withheld taxes or adjust it against their input claims. The seller will only adjust his output vat to exclude amounts withheld (i.e. not paid) by the buyer. In any case, as far as the seller is concerned, the withholding tax is never received or paid.
Tax authorities incur no losses. In fact the whole point of withheld taxes is to reduce noncompliance and underreporting taxes.
In jurisdictions where itâs permitted, the tax is paid directly to the authorities or a trustee and a tax receipt or certificate is submitted to the seller. The authorities receives full funds.
In other jurisdictions, the buyer has to be registered and this withheld input tax cannot not be claimed.
In either case the government loses absolutely nothing.
and
Just to clear the confusion in this thread, P&L figures have absolutely nothing to do with withheld taxes. Taxes are only the income for tax authorities and not for taxpayers.
Sorry, @Abeiku, but you are incorrect about this. The full, so-called gross amount is never a receivable from the customer. It never appears in Accounts receivable. If tax is being withheld at the source, the customer is never asked to pay the gross amount to you, only the net amount. The customer has a completely separate liability to pay the tax authority.
Further, the withheld amount is always an asset, not just after the customer provides a withholding certificate. Both Withholding tax receivable and Withholding tax are asset accounts in Manager. The only difference is that the first has not yet been confirmed as having been paid by the customer on your behalf, while the second has been confirmed and is available to a apply to your tax bill with the authority.
The customer does not pay cash to you, but they pay cash on your behalf and return a certificate confirming the payment on your behalf to you. They pay tax on your behalf to offset your obligation to the tax authority. It is the same as a customer settling a trade payable on your behalf and asking you to offset their liability to you (and not the Total Sales Amount).
The invoice does not automatically put the tax liability on the customer, it is never a part of a sale contract. I wouldnât want us to look at this from the customerâs perspective. We should look at this from the suppliers perspective.
Remember the withholding tax workflow allows users to conveniently track withholding taxes receivable but it is not a requirement to show the withholding tax receivable on an invoice (though it is a requirement to show the âInvoice Total Amountâ) nor is it to be treated as some reduction or discount. Discounts are irrecoverable, Withholding tax is recoverable (part of the sale).
The Withheld amount is of course an asset, it was an asset in the first place. Iâm saying until a tax certificate is received, the asset is technically a trade receivable.
It is this issue that has caused the problem in the Sales Order Tab, No sales Order will ever get completed as the amount reported as Sales Order is always going to be higher than the Invoiced Amount.
The question is, why call the 114,000 Total and call 105,450 Invoice Total in another place?
Iâm only calling for a better name for the 105,450 in the Sales Invoice Tab and on the invoice if that is the figure we are going to see in the Sales Invoice tab
I am not quite sure what you mean by this. Of course, it is the government that puts the liability to withhold and remit the tax onto your customer. The sales invoice merely documents what the law requires.
That is true. But my point is that it is never receivable by you from the customer based on the demand made by your sales invoice. In one way, this all comes down to semantic differences.
I find your reasoning faulty on this. First, unlike sales quotes, sales orders are not assigned statuses, such as Completed. Manager tells us only how much has been invoiced. That is as far as status monitoring goes. I can think of numerous situations where the total of prices entered on a sales order might not equal the gross amount of a sales invoice derived from it. For example, the sales order might have been copied from a sales quote that included projected travel costs that came in below the estimate. Or subcontract prices might have declined. Just as plausibly, there could be valid reasons for invoicing more than the sales order.
When the sales invoice is paid off at the amount net of withholding tax, its status will show as Paid in Full. Had there been a corresponding sales quote, it would be shown as Accepted based on creation of either a sales order or sales invoice, regardless of amounts. So the sales process flow tracking works exactly as described in the Guides, regardless of whether withholding tax is involved.
In my opinion, context makes Invoice total unnecessary on the invoice itself. In the tab listing, it is not so obvious what âtotalâ might be referring to (number of lines, total quantity of items).
@Ealfardan You clearly did not get me. Iâm in Ghana, and in places like Ghana, a lot of people do not pay taxes. Withholding Taxes is the way government is able to at least get some of those taxes.
I didnât mean tax authorities make losses in that sense, I meant to say, tax authorities reduce revenue leakage (revenue from tax collection) with withholding taxes. Government is able to get something from the tax evaders.
Government losses a lot in my side of the world where people evade taxes and there is no working system to track down and punish these tax criminals. Tax deducted at source is one effective way to control tax evasion. It has been so effective that they have actually introduced Withholding VAT.
Sales invoices disclose contract terms, it is never meant to show customers tax obligations (third party issues).
It is optional to show it and it is never a reduction of Sale.
I agree, but assuming nothing of that sort happens, users would expect the total invoiced amount to equal the Sales order which is may be viewed as a legal document by the parties to the sales contract. So the tab listings can be improved with the introduction of another column that shows the WHT component of the sale as demonstrated below
The suggestion above is not perfect but it displays the Total on the invoice, the WHT and the amount treated as Trade receivable.
