Read the Tutorial to work faster

How Can We Help?
< All Topics
Print

Manage withholding taxes

A withholding tax, also called a retention tax, is a government requirement for the payer of a customer invoice to withhold or deduct tax from the payment, and pay that tax to the government. In most jurisdictions, withholding tax applies to employment income.

With normal taxes, the tax is added to the subtotal to give you the total to pay. As opposed to normal taxes, withholding taxes are deducted from the amount to pay, as the tax will be paid by the customer.

As, an example, in Colombia you may have the following invoice:

../../../../../_images/retention03.png

In this example, the company who sent the invoice owes $20 of taxes to the government and the customer owes $10 of taxes to the government.

Configuration

In CPA Books, a withholding tax is defined by creating a negative tax. For a retention of 10%, you would configure the following tax (accessible through Configuration ‣ Taxes):

../../../../../_images/retention04.png

In order to make it appear as a retention on the invoice, you should set a specific tax group Retention on your tax, in the Advanced Options tab.

../../../../../_images/retention02.png

Once the tax is defined, you can use it in your products, sales order or invoices.


Applying retention taxes on invoices

Once your tax is created, you can use it on customer forms, sales order or customer invoices. You can apply several taxes on a single customer invoice line.

../../../../../_images/retention01.png

The printed invoice will show the different amounts in each tax group.

../../../../../_images/retention03.png

Previous Manage prices for B2B (tax excluded) and B2C (tax included)
Next Taxes
Table of Contents