In this chapter, you will learn how to do the following:

• Configure a withholding tax
• Process a taxable transaction with the new tax in the general ledger

You create taxable transactions directly in the general ledger if you are required to withhold taxes from GL transactions and create tax-related transactions manually.

To create a tax-related journal transaction, you use the Journal Transactions (GL301000) form. On this form, when you enter transaction data, you select the Create Tax Transactions check box, which causes the additional Tax ID and Tax Category columns to appear in the table.

Each tax-related transaction should contain at least three journal entries:

• A journal entry that represents the taxable amount. (This amount can be recorded, for example, to any expense or income account, depending on the tax type.)
• A journal entry that represents the tax amount.
• A journal entry that represents the document amount. (This amount can be recorded, for example, to the Accounts Payable account.)

With a transaction entered in the general ledger, the system does not calculate taxes; it uses the tax amount entered by the user. For details, see Tax Entry from GL: Generated Transactions.

When you specify the account (and subaccount, if applicable) to which the tax amount is recorded in the Account (and Subaccount, if any) column on the Journal Transactions (GL301000) form, the system automatically enters the tax associated with this account (and subaccount, if any) in the Tax ID column.

While you are adding a journal entry, you can overwrite the default Tax ID value.

When you select the account to which the taxable amount will be recorded in the Account column on the Journal Transactions (GL301000) form, the system automatically enters the tax category associated with the general ledger account. The associated tax category is the one that is assigned to the selected general ledger account in the Tax Category column on the Chart of Accounts (GL202500) form.

The tax-related amounts will be reflected in the appropriate tax report only if the number of the document related to the journal transaction is specified for each journal entry in the Ref. Number column of the Journal Transactions (GL301000) form.

If the Ref. Number column is empty, the tax and taxable amounts will not be reflected in the tax report. For details on tax reports, see Tax Report for VAT: General Information.

If the lines of tax-related journal transaction that you create on the Journal Transactions (GL301000) form involve multiple branches of the company, you enter the lines as follows:

1. You enter the lines related to one branch and make sure that the transaction is balanced. You specify the same reference number in the Ref. Number column for the lines with this branch. This column contains the reference number of the external or internal document associated with these lines.
2. You enter the lines related to another branch and make sure that the transaction is balanced. You specify a separate reference number (that is, different than one you have specified for lines in other branches) in the Ref. Number column for the lines with this branch. You then repeat this step if additional branches are involved.

The following table shows an example of a GL transaction with lines belonging to the HEADOFFICE and RETAIL branches.

As an alternative to entering tax-related transactions on the Journal Transactions form, you can record taxes by using the Tax Adjustments (TX301000) form. For details, see Sales Tax Adjustments: General Information.