@Mark, the Deduct withholding tax checkbox is on sales invoices, not purchase invoices.
@ejjaadiargo, you are using the wrong process. You should not be applying a tax code for withholding tax. You should apply your normal VAT tax code, as you would on any purchase invoice that does not require you to withhold tax at the source.
The income tax is a tax withheld at the source. See this Guide: https://www.manager.io/guides/12346. Follow the process in the last major section, headed Purchase invoice process.
Because you don’t need it. On a sales invoice, you need to track an asset through two phases: withheld by a third party customer and available for application against your own tax due after the customer remits to the authority. With a purchase invoice, you are always in full control. You pay part of the invoice balance to the supplier and hold part to remit to the government. On the sales invoice, you have probably already applied a tax code, and withholding must be calculated on the tax inclusive amount. On a purchase invoice, you make a straight deduction of an amount that should be listed on your supplier’s sales invoice to you.
[quote=“Tut, post:11, topic:28771”]
withholding must be calculated on the tax inclusive amount.
[/quote] not in Italy, here is on tax exclusive amount but that’s not my issue.
The problem is that withholding on purchase invoices in Italy is cash based even if we are on accrual based accounting, ie the withholding is due to the government only once we pay the invoice to the supplier. The mess is to create such kind of report.
I think that having a standardised way for both the withholding can lead to a consistent reporting.
Putting some kind of withholding tax checkbox on a purchase invoice will not address the Italian requirement for cash-based remittances. The way to do that is to enter the deduction on the payment form.
@ejjaadiargo, I think you misunderstand my post. I understand the situation in your country. That is exactly what the Guide addresses in its section Purchase invoice process.
My comments were directed towards @Davide’s question about why there is no checkbox on purchase invoices like there is on sales invoices. As I already wrote, the reason is that the program does not need to track withheld amounts through multiple phases like it does with sales invoices. With a sales invoice, you need a method for notifying customers of the amount they must withhold. You do not need that on a purchase invoice.
Yes but on that guidence tell us to create withhold tax in standing alone line. It would be little bit difficult if on one invoice there are purchase of services or goods. The two purchases use different tax regulation and the withhold tax invoice can’t to be refers directly to which one of lines.
I do not see why this would be a problem. You can have as many line items for withholding tax on a purchase invoice as necessary. Each one can post to a different tax liability account, if that is necessary. This actually gives you more flexibility than a checkbox (like on a sales invoice). The checkbox on a sales invoice results in all withholding tax being posted to the same account. There is no choice.