Calculate withholding tax for vendors
Companies in some countries/regions must pay withholding tax to the government for certain services or vendor purchases. Business Central calculates withholding tax for purchase invoices and orders, based on your setup for withholding tax. The tax amount is withheld from the payment and reduces the total amount you owe to the vendor.
Set up vendors for withholding tax
To include a vendor in withholding tax calculations, on the Vendor Card page, turn on the Withholding Tax Liable toggle. Then, in the Withholding Tax Bus. Post. Group field, specify the general ledger account to which to post tax amounts.
Using withholding tax
If the vendor, item, and G/L account are set up for withholding tax, Business Central automatically calculates the tax amount when you post purchase documents that include them on their lines. However, it only creates a withholding tax entry if the value is more than the minimum threshold in the posting setup you created for withholding tax. Learn more at Create a posting setup for withholding tax.