Can you suggest a workaround on how to transact 2% Withholding tax and VAT in one invoice? This is for the Philippine Market

Meg-Kison · ‎December 10, 2024

Kevin_C

It's great to see you here in the QuickBooks Community, Meg.

Yes, I can provide some insight on how to transact an invoice with withholding tax and VAT. I'd be glad to provide the details below.

Since you mentioned that you want to include the 2% withholding tax in a single invoice, you can simply create a corresponding expense account and service item. Follow these steps to set up a withholding tax expense account:

Go to Settings ⚙ and select Chart of accounts.
Click New and pick Other Expense from Account Type dropdown.
From the Detail Type dropdown, choose Other Expense.
Name the account "Withholding Tax Expense", then Save.

After that, create a withholding tax expense item:

Go to Settings ⚙, then pick Products & services.
Click New, then choose Service.
Name the item "Withholding Tax".
From Income account dropdown, select the withholding tax expense account that you’ve just created.
Select Save and close.

Once this is done, you can add it as an additional line item to your invoices. Please note that you'll need to calculate the 2% for the entire invoice and enter it as a negative amount in the Amount column.

Alternatively, you can follow the steps in this article if your customer pays their invoice but withholds tax: How do I record tax withheld by my customer?

However, if this isn’t the situation you're referring to, please share additional details or screenshots to help clarify your request.

Additionally, check out these articles for easy tips on customizing your invoices to match your brand and accurately recording your invoice payments for better financial management:

If I can be of any additional assistance with other concerns about withholding taxes in your invoices, kindly add a comment below. I'm available around the clock to provide appropriate information.