Invoices Including Withholding

Even if this kind of invoice differs from country to country: In some purchases, the value-added tax is shared between the buyer and the seller, that is, it is paid by withholding. Thus, the buyer does not pay the entire VAT to the seller. By declaring the deducted tax amount to the tax administration, both parties share the liability.

Withholding Rates

Route: Dashboard > System > Parameters > Withholding Rates

• Enter the withholding rate.
• Specify the withholding code selected for the withholding rate.
• Set the tax code.
• Select which accounts the withholding will be recorded according to the VAT rates.

Warning: Follow the notifications regarding the current withholding application. Withholding rates may vary depending on the types of products and services and the designated recipient types. Get help from your financial advisor or accountant when defining withholding rates or choosing them in purchase and sale invoices.

Warning: The Withholding Accounting Code field is not a required field. In the case of definition, it reflects the accounts receivable to the defined accounting code.

When the withholding definitions are selected in the purchase and sales invoices, the withholding amount is calculated on the basis of the line to be withheld by multiplying the VAT-Tax total amount in the line with the withholding rate.
The sum of the withholding amounts of the lines constitutes the total withholding on a document basis.

How are the Accounting Records of Withholding formed?

Accounting record in purchase and sales invoices, the amount withheld according to VAT rates is recorded in the purchase and sales withholding accounting account.
It is sufficient to select the withholding account codes for purchase and sales transactions.

Withholding Accounting Rules in Return Invoices

When the purchase and sales invoices are returned, the same transactions can be made with withholding. In some cases, return invoices may arrive with no withholding amount or rate specified.
In this case, a case occurs where the withholding amount is not recorded in the accounting account. Create a special transaction category for an invoice that is in this way, and tick the option "Withholding amount should not be accounted on return invoices" in this transaction category. In this option, the withholding amount is deducted from the VAT amount and recorded directly to the VAT account.

Warning: In transaction types 55 and 62, the option "Withholding amount should not be accounted" appears.