Withholding Tax

Using my Dolibarr
1

In almost all the countries there is a provision for W/H tax.

Now W/H tax differs on type of service or product say ranging from 3% to 10%. Hence it needs to be implemented on each line.

Say you have service 1 for USD 100. ( W/H tax 3%)
You have another product or service for USD 100. ( W/H tax 5%)

VAT is say 7%

final invoice will be like this:
Service 1 USD 100 VAT 7% W/H Tax -3% Total amount ( 100-3+7)=104
Serv 2 USD 100 VAT 7% W/H Tax -5% Total amount ( 100-5+7)= 102

Grand Total: 206

2

A “second tax” (withholding) is still in development (for the moment, only spain can manage two taxes). But we work in it.
Which country is concerned by withholding tax ?
Also, how does the withholding tax must appears on an invoice ?
On each line, after the vat.
Does the total of withholding amount (-8 in your example) must appears somewhere on invoice ?
This answer may help to develop this feature quickly…

3

Well i am referring to country Thailand. But I trust this must be applicable to many countries. I am trying to elaborate as descriptive as possible.

The W/H tax is like advance Income tax.
It is not required to be on the invoice.( reasons will be clear below, however inserting in invoice can be a good business practice).
It is responsibility of payer to deduct W/H tax ( only on some types of items) and deposit with revenue department.

It is worth noting that W/H tax is applied on the amount before VAT.

case 1 invoice raised by you to customer.
You raise an invoice to customer as follows:
Service 1 USD 100 VAT 7% amount USD 107 ( W/H applicable say 3%,)
Service 2 USD 100 VAt 7% amount USD 107 ( W/ tax applicable say 5%)
Product 1 USD 100 VAt 7% amount USD 107 ( W/H Tax say NIL)

Total invoice amount ( net of tax) USD 300
VAT USD 21
Total including Tax USD 321

Now customer suppose to pay you ( 321- 3 -5) = USD 313
balance USD 8 which are deducted as W/H tax will be deposited by customer to revenue department and a certificate will be handed to us. We can offset this amount in our yearly income tax if company makes profit.

It is very interesting to note here that deducting W/H responsibility falls on customer and if they do not deduct any W/H tax they can just pay USD 321 ( in case nothing is mentioned on invoice and customer forgets or unaware of W/H tax deduction for particular item), any penalties due to non deduction of tax shall be paid by customer.

In case of Dolibarr present version :
No problem as far as invoice is concerned ( as this does not have to be on invoice). Only problem is you receive a payment of USD 313 against an invoice of USD 321, i.e. USD 8 will always keep showing as balance ( you can not issue a credit note, as customer in fact paid 321 but we received only 313).

case 1 invoice raised by supplier to us.

Same thing we will pay complete USD 321 ( USD 313 to supplier and USD 8 to revenue department).

So it is just a matter of accounting.

Thanks

4

I think I found a way out as follows:

  1. create a payment type as W/H Tax
  2. create a new bank account as W/H tax

Which will put balance amount to W/H tax account ( a dummy bank account)
thanks

5

Withholding Tax is used for both for the Vendor and the Customer.It is the taxable portion deducted by company to pay for Taxation authority.To enable that option,SAP as designed withholding tax concept.It is possible that their gross wages are not sufficient to have any income tax withheld but otherwise,they are no different than your full time employees.

6

Withholding tax is a government requirement for the payer of an item of income to withhold or deduct tax from the payment.The amount withheld is a credit against the income taxes the employee must pay during the year.The purpose of withholding tax is to facilitate or accelerate collection,by collecting tax from payers rather than a much greater number of payees, and by collecting tax from payers within the jurisdiction rather than payees who may be outside the jurisdiction.It may also be used to counteract tax evasion and tax avoidance.

7

To prevent the recipient’s tax return is filed a final tax liability.when the account can be considered as a payment by the recipient government to stop the obligation to get stopped, or additional tax due may be less than If it is determined to prevent the recipient’s tax liability is over.

8

Hi Eldy,
also Italy is concerned by withholding tax.

We often receive invoices from freelancers with withholding tax. The amount is calculated at the end like the example below:

Total amount                         100,00
VAT (20% of total amount)             20,00
Total invoice                        120,00 (Total amount + VAT)
Withholding tax (20% of TOTAL AMOUNT) 20,00
Total to be paid                     100,00 (Total invoice - Withholding tax)

The month after the invoice payment, we must pay withholding tax of that particular invoice

Is there any way to achieve this result?

I hope I have been helpful. Thanks a lot !
Manuel

9

Hi,
I’m italian and we have “ritenuta d’accordo”, it works like the example before.
I’m a PHP developer and I’m thinking to write down an implementation when I found this post: can we have more information? Like the release date, or something about how it will work?
Talking about that: is there a way to “expand” an object in dolibarr? For example: if I want to add a field to the receipt (facture) without duplicate the module? In italy we have receipt with “IVA differita”, that is flag specifing a VAT tax that you only pay when the customer pay you, but it’s valid only for some of those, which is the best way to add this feature (with a field in the database and a checkbox in the form, for example)?

Thank you for your good work.

10

Hello,
I am very interested in this thread because I am an Italian freelancer and I must ad “INPS” tax and “ritenuta d’acconto” (withholding) tax to my invoices.

If dolibarr cannot do this I cannot use it.

Is dolibarr now supporting it?

Thanks,
Mario

11

In Thailand withholding ATX is also used. For us implementing Withholding TAX is important as well.

Joey

12

Hi Joey,

did you realize that you revived a thread which is more than ten years old? A way more complex tax handling is possible by now with the current releases of Dolibarr. Regarding the feature set and the suitability for your needs, I recommend to have a look in the Wiki and check out a trial installation.

13

Hi Priojk,

I must admit I noticed that, but I only noticed a couple of seconds after I posted. And a one-liner such as I put in as not productive either.

And what you are saying is correct. I am testing TAX in Thailand now and if I have more questions I will open a new one for this in the forum.

If the re-opening is an issue, you can just close it again as far as I’m concerned though.

Joost (Joey)