VAT and WHT

Value Added Tax (VAT)

VAT is an incremental tax that is levied on the value added at each stage of the processing of a raw material or the production and distribution of a commodity which typically has the impact of a sales tax on the ultimate consumer.

• Input - The VAT paid to Suppliers

• Output - The VAT received from Customers

At the end of your VAT period, the amount that needs to be paid to your Revenue Services is the total Output received less the total Input paid in the period.

Rules for selecting VAT in Transactions

• Use the VAT linked to the Transaction Setup if:

  • The VAT % = 0%

  • The Transaction does not link to Customers or Suppliers

• Use the VAT linked to the Customer if the Transaction links to Customers and the Item VAT% > 0

• Use the VAT linked to the Supplier if the Transaction links to Suppliers and the Item VAT% > 0

Withholding Tax (WHT)

Withholding Tax is a tax that is levied at the source of income as an advance payment on Income Tax. It is levied in certain countries against the sale of pre-defined items or services. In BOS Enterprise, WHT does not refer to the Tax withheld from Salaries which is more commonly referred to as PAYE.

The money that your company withholds, generally needs to be paid over to the government in the following month.

The money that is withheld against you can be claimed from your income Tax at the financial year end.

Setting up

• Create a Withholding Tax account linked to the Taxation Category

• Create a Transaction Type for WHT Output to record the money that is withheld from your Customer Invoices - Dr. Withholding Tax - Cr. Customer

• Create a Transaction Type for WHT Input to record the money that you withhold from Suppliers - Cr. Withholding Tax - Dr. Supplier