Setting Up Withholding Tax Preferences

Important:

This topic pertains to withholding tax in NetSuite accounts that do not have the SuiteTax feature enabled. If you are using a NetSuite account where the SuiteTax feature is enabled, go to Withholding Taxes in SuiteTax.

Withholding tax is no longer being updated for new features and reports in accounts that do not have the SuiteTax feature. All version upgrades of the Withholding Tax SuiteApp include fixes for reported issues only.

Withholding tax preferences enable you to set rules for the following:

Make withholding tax codes available on either purchases or sales, or both
Specify whether to post withholding tax either at the time of payment or at the time of invoice
Specifying whether tax codes should be applied to each line item in a transaction, or to the sum of the transaction

To set up withholding tax preferences for each nexus:

Go to Setup > Withholding Tax > Set Up Withholding Tax.
Provide values for the following fields:
1. Nexus – Select the nexus that this withholding tax setup applies to.
2. Enable Tax Lookup on Transactions – Check this box to automatically select the default withholding tax code of the item or entity on transactions. You can change this on a transaction.
3. Auto Apply Withholding Tax – Check this box to automatically select Yes in the Apply WH Tax? column per line on transactions. You can change this on a transaction.
  
  Note:
  You can opt to include or exclude certain lines of a transaction when computing the base amount for withholding tax.
  
  NetSuite does not apply withholding tax to the following line items:
  - Description item type
  - Subtotal item type
  - Group item type
  - End of Group line (the amount of the group item)
4. Available on Purchases – Check this box to make withholding tax codes available on purchase transaction forms (Check payments, Purchase Orders, Bills, and Bill payments).
  1. Disable Withholding Tax in Purchase Orders – Check this box to disable withholding tax in purchase orders.
    
    Note:
    When withholding tax is disabled in POs, the Apply WH Tax? column will be not be automatically set to Yes on a bill that was created from a PO, even if Auto Apply Withholding Tax was enabled in the tax setup. However, you can check the Apply WH Tax? box for each line item that you want to apply withholding tax to.
  2. Tax Point – Set the point of recording of withholding tax as a buyer. Select On Accrual to post withholding tax on bill creation. Select On Payment to post withholding tax at the time of payment (write check/bill payment). The withholding tax amounts are automatically posted to the appropriate general ledger accounts. On a transaction record, you can go to the More Actions menu and click GL Impact to view the GL Impact page for the transaction.
  3. Applies To – Specify whether the selection of appropriate withholding tax codes can be applied to the entire sum of the transaction, or should be defined individually per line item. You can change this on a transaction.
5. Available on Sales – Check this box to make withholding tax codes available on sales transaction forms (Cash Sales, Sales Orders, Invoices, and Invoice Payments).
  1. Disable Withholding Tax in Sales Orders – Check this box to disable withholding tax in sales orders.
    
    Note:
    When withholding tax is disabled in SOs, the Apply WH Tax? column will not be automatically set to Yes on an invoice that was created from an SO, even if Auto Apply Withholding Tax was enabled in the tax setup. However, you can check the Apply WH Tax? box for each line item that you want to apply withholding tax to.
  2. Tax Point – Set the point of recording of withholding tax as a seller. Select On Accrual to post withholding tax on invoice creation. Select On Payment to post withholding tax on payment (cash sale/payment acceptance). The withholding tax amounts are automatically posted to the appropriate general ledger accounts. On a transaction record, you can go to the More Actions menu and click GL Impact to view the GL Impact page for the transaction.
    
    Note:
    Currently, header discounts are not supported when withholding tax is set to record on accrual in sales transactions. To correctly calculate withholding tax for invoices with header discounts, set the tax point to On Payment for sales transactions.
  3. Applies To – Specify whether the selection of appropriate withholding tax codes can be applied to the entire sum of the transaction, or should be defined individually per line item. You can change this on a transaction.
Click Save. The next step is to set up withholding tax types. See Setting Up Withholding Tax Types.

To set up withholding tax preferences for each nexus:

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