Withholding Tax upon Invoicing

Generally, withholding tax is deducted upon payment to the vendors. But in a few countries (i.e. India and Philippines) Withholding tax is calculated on invoicing or payment whichever is earlier. In Philippines, it depends on the nature of the industry. In service industry, the clients are fine to deduct upon invoicing but in goods industry, they play safe and likely to deduct it during vendor invoicing.

 

In India, the localization is available which is very robust and fulfill almost all the localization needs.

But there is no AX localization for Philippines, so the standard AX does not meet this requirement.

As a workaround, we can map the withholding tax with negative VAT. So, in this case, standard feature of withholding tax will be redundant. All withholding tax transactions will appear as negative VAT transactions in VATTRANS table. There will be some changes in the reports level and VAT payment feature of AX so as to exclude negative VAT (belonging to withholding tax) from the processing.

Though, it is not a very clear approach but the client will be happy to meet legal requirement without much customization.