I don’t know if this is the standard, but Tanzania applies withholding tax on the “gross” amount. Which to me seems counterintuitive. Much like VAT the withholding tax is added on top of the sales prices instead of being “withheld”.
On paper the withholding tax is 10%, but it effectively works as a 11.11% tax.
If I “include” the added on withholding tax and then deducts it, it looks correct on the purchase invoice. I need to pay the supplier 1,000 USD and pay 111.11 USD in withholding tax.
On the invoice, the $1000 is what you have to pay.
But, in the journal transaction, it show how Debit & Credit is posted throughout the account and each side should have the same balance. When you record 1,111.11 on price, it is posted to the suspense account on the debit side, so it has to be posted on the credit side too, that’s why there is 1,111.11 posted to the Accounts payable. Then you added withholding tax in the invoice, it is posted to the withholding account payable on the credit side and to the accounts payable on the debit side, and the balance of 1,222.22 is a summary total of the debit side and credit side of the transaction.
Can you check and show the payable accounts balance and withholding tax payable balance? $1,000 should be in your accounts payable and $111.11 should be in your withholding account payable.
In addition to my explanation above, we have to understand when a transaction is posted to the liability accounts (e.g accounts payable & withholding tax), when it’s on the debit side the amount posted to it will reduce the account balance, and when it’s on the credit side it will add the account balance. You can see that 1,111.11 is on the credit side of accounts payable, but on the debit side it’s 111.11. Remember DB is reducing the balance, CR is adding the balance. So after you adding the 1,111.11, then 111.11 is reducing the balance from the accounts. So the payable amount is $1.000 like in your invoice. To see the account balance, you can see your balance sheet, not in transaction journal.
Yes, if your Accounts payable which represents the amount on the Invoice that you have to pay the Supplier, in your case is $1,000 and the Withholding tax payable show the $111.11 that you transfer to the tax authorities. It is important to clear these eventually with payments according to the Invoice’s stipulated timeframes. You clear them separately as the Payee is different (Supplier and Tax authority).
That is correct! I am not sure what you do not understand. The 1,111.11 includes the Withholding tax that you put at 10% so rendering the Total on the Invoice view screen to be 1,000 which you will pay the supplier. You will clear the Withholding tax separately when paying. As mentioned you need to create a New payment (View screen top right) to settle the Invoice at 1,000 (Accounts payable) and create a separate Payment of 111.11 to clear the Withholding tax account.
As @eko mentioned, it’s a different date and it’s a different Purchase Invoice. You can click the View button to check the transaction of that Purchase Invoice. When you click a number on an account from summary, it will show all of the transactions that posted on that account from the start period to the end period you set in the summary Edit screen, or if you didn’t set the start & end period, it will show all the transactions between the first date you create transaction in Manager till today.
I understand that part. But this is in fact the same purchase invoice, and for some reason it’s showing up twice as both a debit and a credit in the withholding tax payable account.
Fortunately Manager doesn’t do any automation so your entry is user-error. Check History and then View and undo the Purchase invoice that you deem incorrect, or delete it straight away using its Edit screen.
The correct entry (I used test business) is as follows:
If I go on the lower one it has this key: 605af4ee-eb8d-45ef-b0de-5c7ca6c1e8cd
If I go on the upper one it has this key: 605af4ee-eb8d-45ef-b0de-5c7ca6c1e8cd
It’s the same transaction. I don’t know why it shows up twice in the summary, with two separate lines.
Both of these would show up in Suspense account as well because you have not selected an Account or an (no)Inventory item that would be assigned to an account!
They do, but I don’t quite get it? What does that help with? It’s the same transaction, 1 line, showing up twice. I’m obviously missing something, just clueless as to what.
If I delete “one” of them, both goes, because it’s the same.
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