I earlier made a suggustion on withholding tax in the supplier or customer statement which was done and I am most grateful to the team.
I now suggest that
a narration or description should e given in the statement to indicate that the amount in the statement is a withholding tax deducted. The withholding tax appears with the invoice details at the description.
You could see 118.50 and 96.77 in the photo attached. They are withholding taxes but the narration do not give such description.
In most cases, taxes are withheld during payment not when invoices are received or raised. I suggest the withholding tax checkbox should be taken to the payment or receipt tab rather than the invoice tab. This will also help deduct taxes from payment which are not invoiced. Eg, paying an audit fee in Ghana attracts 7.5% wht, when the withholding is on the payment tab, the accountant can do that easily rather than journal entries for such withholing tax.
I LOVE MANAGER.
Withholding taxes come as a form of payment. It is not an adjustment on invoices. Now when it is activated on the payment tab, It will still have same impact on the receivable or payable balance. The reason being that when payment is done and tax withheld, it will go to the statement to show the invoice amount, how much cash was paid for the invoice and the balance will also show at the debit side as tax withheld. And I am saying that in my jurisdiction, it is even prudent to withholding tax during payment than during purchases. What if in the course business you return the goods to your suppliers and thast time you had withheld taxes from the invoice on the day of purchase and paid same to the tax authorities, what happens to the tax you paid to the tax authorities.
Another advantage is that, when it is on the payment tab, you can withhold taxes from payment which does not come with invoice, example payment to auditors or part time worker etc. There are so many payment made for expenses which doesnot come as purchases for you to withhold tax from invoice. I am also making this suggestion so that journal entries will reduce. Kindly give my suggestion a thought @lubos
In a Q&A session, I once raised a question to the Commissioner General of the Ghana Revenue Authority regarding this matter. The response clarified that all forms of Withholding tax should be withheld and promptly paid to the Revenue Authority upon receiving an invoice from a supplier. While you have the flexibility to delay bill payments, it is important to understand that the payment of taxes you are required to withhold cannot be delayed.
I hope you know that you can select the Withholding tax payable account on Payment forms to record tax withholding.
The Revenue Authority recognizes the importance of providing organizations with a reasonable timeframe to fulfill their withholding tax responsibilities. Specifically, for General goods and services as well as Works, there is a grace period until the 15th of the month following the deduction to remit the tax to the government. In other words, you have until the 15th of each month to both file and pay the taxes that were withheld during the previous month. This allows for a systematic and timely process of fulfilling withholding tax liabilities. This allows businesses to resolve outstanding issues such as sales returns etc. Besides, you can always make adjustments, you just have to notify the tax authority and keep a record/copy.
Whenever you withhold taxes, it implies that you have incurred a payable amount to a supplier. Even though you won’t be making a cash payment directly to the supplier, it is necessary for you to obtain withholding tax credit certificates or receipts from the government and provide them to the respective recipients such as employees or auditors. This implies that you still need to maintain these records in your system to accurately document the payable and ensure proper accounting. So Manager is helping you keep proper books of accounts here.
I totally agree . A simple text such as “tax deducted” would be sufficient.
I did not say withholding taxes were adjustments on invoices. I said they affect payables and receivables. In that way, they are similar to related payments and receipts, affecting the balance due remaining on invoices. That is different from adjusting the invoice amounts themselves.
The fact is, it is extremely difficult, if not impossible, to accurately account for withholding taxes if you are not using sales and purchase invoices for transactions involving tax withholding. Generally, an auditor should provide you an invoice. Part-time workers’ pay should be handled with payslip deductions (if they are employees) or purchase invoices (if they are subcontractors). In my opinion, withholding tax should never be handled only with an undocumented transaction like a stand-alone payment. If for no other reason, I don’t believe you would pass an audit with such a system.
