Withholding Tax

Oracle R12 – Withholding Tax (WHT) in AR – how to account for it

Withholding tax (WHT) is not Tax! it’s the withholding of tax from a payment to a supplier. With standard functionality in AP to handle WHT, how do we handle the WHT on an AR invoice? We don’t need to actually withhold anything on the AR invoice but what we do need to do in the majority of cases is to inform the customer how much WHT should be applied and then ideally to automate the WHT application when receipting cash. Continue Reading

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.

Oracle R12 Withholding Tax for AR







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.

Oracle R12 Withholding Tax for AR








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.