Oracle R12 – Withholding Tax on Receivables (AR) Transactions
This article explains how in Oracle R12, you can create an invoice that has the correct total amount but with the lines adjusted down in accordance with the potential to automatically adjust the AR transaction to record the withholding tax.
To do this you will need to create a separate tax regime which takes a % based on the compounded GB VAT tax rate, as shown below.
In the example above you will see the original line amount was for 1000 but had 20% tax applied to it. By withholding 20% of the total invoice you would get 240, meaning that the original line amount of 1000 is now actually only 760.
By modifying the auto-accounting rules you can set the withholding tax line to be the same as the revenue account. In the example below you can see that 1. Is the original tax line and 2. Is the withholding tax line.
Whilst withholding tax is only applied to the AP transaction, it is often required to show what amount of withholding tax is required on the AR invoice that is sent to the customer. With a modification to the way the invoice is formatted, it is possible to automate the creation of the withholding tax line on the AR transaction without actually effecting any of the normal tax calculation.