Entering Vouchers With VAT and Withholding
In the European Community, it is common to have a voucher with both VAT and a portion that is withheld. The amount that is withheld is calculated at the time of payment, rather than scheduling a separate payment for the amount that is withheld. When you are configuring withholding, you can specify whether VAT should be included or excluded from the withholding calculation.
You set up the parameters for calculating withholding on the Withholding Options page (which you access through the Misc. Setup (miscellaneous setup) link from the Withholding Entities page). Select the Apply VAT check box on this page if the VAT should form part of the basis for calculation. For example, let's say that the merchandise amount is 1000.00 EUR and the VAT is 70.00 EUR. If the withholding should be on 1070.00 EUR, you select this check box to achieve the correct calculation.