Withholding Tax on Customer Invoice

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Dec 21, 2015
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Hi All,
There are some countries in Asia such as Thailand and Philippines which require the customer to withhold tax for income at the time of supplier payment. Based upon requirements for these countries, the withholding tax should be recorded at the time of customer payment, not at the time of customer invoice.

For example, both parties are located in the Philippines.

A. The vendor invoices the customer for 1,000.
B. Customer pays vendor 900 and Philippine government 100
C. Customer receives payment for 900.

Invoice - Acctg Entry
Dr A/R 1000
Cr Sales 1000

Invoice Payment - Acctg Entry based on customer remittance
Dr Cash 900
Dr Receivable WHT (asset) 100
Cr A/R 1000

Questions
1. Since the withholding tax is done at the time of payment, does anyone know what should be included on the printed invoice? Is it the gross amount or the gross amount less expected WHT?

2. Do we need to include a Withholding Tax ID for the customer to remit payment?

3. I believe the vendor prints a payment certificate to the government. At what point is this generated? Before or after the customer payment and cash application?

Any advice around this subject would be greatly appreciated. Thank you.
 

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