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Tax retention

Dear All,

This is a new law in our country as all companies are required to retain 5% of the payment due to the contractors, until they provide valid tax clearance certificates issued by the tax authority.

This retention amount needs to be calculated at time of invoicing and it should be possible to pay this retention amount to vendors at a later point of time once the tax clearance certificates provided by the vendors during a year.

Following entries to be posted in system.

Example: vendor invoice - 100.00

Expense -debit - 100.00

Vendor-credit - 95.00

Vendor-credit-tax retention spl Gl ind - 5.00

Tax retention payment in year (after vendor submit the tax clearance certificate)

Vendor-debit-tax retention spl Gl ind - 5.00


There is a retention available in MM configuration which we are using for the other retention (not tax retention), hence we can't use this feature for tax retention.

Please advise and how we can incorporate this in system.



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