# Withholding tax

When using the withholding tax on purchases in the presence of value-added tax, the deduction is made on the total value after the tax, and this is illegal.
I hope to adjust it to the total before value added tax
Thank you

Manager applies withholding tax on the total of purchase amount plus VAT because that is the most common approach around the world. If your jurisdiction prohibits this, you must adjust the withholding rate entered into Manager to a lower percentage rate to compensate. Here is an example:

• Assume a purchase amount of 100.
• Apply VAT of 15%.
• Apply withholding of 5%.

Under Manager’s default approach, 5% withholding would be calculated on the sum of the purchase amount and VAT (115). So withholding would be 5.75.

But you want withholding to be only 5.00. So you would adjust the entered withholding rate to 4.348%. The formula for the adjusted percentage rate is:

R = 100 x W / (100 + V)

where R is the adjusted percentage rate, W is the nominal percentage withholding rate, and V is the percentage VAT rate. In the example:

R = 100 x 5 / (100 + 15) = 100 x (5 / 115 ) = 4.348%