[GNC] Help adding withholding tax and VAT in seperate fileds of the invoice.

[Christopher Lam]

A final note relating to recording the withholding tax as liability: it
will artificially decrease your net worth by the cumulative tax amount.

On Thu, 28 Jan 2021, 12:29 am Nikos Parafestas, <antidoto at posteo.net> wrote:

> Thank you Derek for your answer.
> In my case I am not accountable whether or not my client pays the 20%
> Withholding Tax but it is obligatory to be written in the invoice as a
> seperate line. It would be nice for me to have a report every year for
> this amount but it is optional.
> On the other hand I need to keep track of the 24% VAT, because I have
> to deposit the VAT I recieve to the goverment every 3 months.
>
>
>
>
> On Wed, 2021-01-27 at 09:17 -0500, Derek Atkins wrote:
> > Hi,
> >
> > On Wed, January 27, 2021 8:49 am, Nikos Parafestas wrote:
> > > Beacuse of the taxation sytem in my country I need to add
> > > withholding
> > > tax and VAT in seperate fields in the invoice. This applies to
> > > every
> > > tansaction with a net price of 300 euro or more.
> >
> > The first thing to note is that GnuCash only allows you to apply a
> > single
> > Tax Table per invoice line-item, but each line item can have its own
> > unique tax-table.  You can (I believe) supply a "default tax table"
> > which
> > gets applied.  There is no way to set a floor, meaning that you will
> > need
> > to manually determine if/when the tax(es) apply.
> >
> > > For example if the Net Price is 1000 euro the invoice should
> > > include
> > > the following:
> > > ---
> > > 1. Net Price = 1000 euro
> > > 2. VAT = 240 euro
> > > 3. Total Price 1240 euro
> > > 4. Withholding Tax (which is 20% of the Net Price. This amount the
> > > client pays directly to the goverment not to me) = 200 euro
> > > 5. Payable (Total - Witholding Tax) = 1040 euro
> > > ----
> > >
> > > 1-3  : I have managed to add them correctly
> > > 4 & 5: I don't have a clue how to add them.
> >
> > The best way to think about your particular case is with some
> > algebra, and
> > you'll need to help me a bit to fill that in.
> >
> > GnuCash has two ways to compute taxes:  either they are included in
> > the
> > price, or they are added to the price.
> >
> > If tax is included, then the line-item price is what the user pays,
> > and
> > the tax is computed in such a way that value+tax = price.  In other
> > words,
> > if the price is $100 and 5% tax is included, then the customer pays
> > you
> > $100, of which $4.76 is tax (because 5% of $95.24 is 4.76, and 95.24
> > +
> > 4.76 == 100).
> >
> > If the tax is added on, then the line-item price is the basis for the
> > tax,
> > and the user pays the price+tax total.  In other words, if the price
> > is
> > $100 and there is 5% tax, the user pays $105.
> >
> > Now, back to the GnuCash tax tables.  You can include multiple taxes
> > in a
> > tax table, but the two are independent.  So let's say you have a 5%
> > state
> > tax and a 2% city tax, where the user pays a total of 7%.  This is
> > easy,
> > you have two entries in the tax table, one for 5% and one for 2%.
> >
> > However, there are places (e.g. Canada), where one tax includes the
> > other.
> >  For example, you might have a 10% GST and a 7% PST, where the PST
> > *includes* the GST.  In this case, you would put the 10% GST in one
> > tax
> > table line, but for PST you cannot say 7%, because the 7% includes
> > the
> > 10%.  This is where the algebra comes in.  To compute the PST, you're
> > want
> > to compute x% where:
> >
> > x% of price = 7% of (price + 10% of price)
> >   x * price = .07 * (1 + 0.1) price
> >           x = .07 * (1 + 0.1)
> >             = .077
> >             = 7.7%
> >
> > So you would enter GST of 10% and PST of 7.7% to get the correct
> > taxes
> > computed.
> >
> > Now, back to YOUR case.  It sounds like you have:
> >   price = 1000
> >   VAT = 24% of the price
> >   Withholding = is 20% of price
> >   Invoice amount is price + VAT - Withholding
> >
> > So really, the invoice amount is price + 4%.
> >
> > It sounds like you need to actually show VAT and Withholding amounts
> > on
> > the invoice.  Do you need to actually RECORD the VAT + Withholding
> > amounts, or just display them on the invoice?  What if the customer
> > does
> > not actually pay the withholding to the government?  Are you still on
> > the
> > hook for it?
> >
> > I am asking because the answer to these questions will tell us if we
> > need
> > to handle it within the tax table system, or by the invoice report.
> >
> > If you are only on the hook for 4%, regardless of whether they pay or
> > not,
> > then you should probably just record the 4% and update the invoice to
> > report the 24% and 20% values.  However if you need to actually
> > record
> > that, we might have a SMALL problem, because I am not sure that
> > GnuCash
> > supports a "negative" rate, which is what you would need for the
> > withholding.
> >
> > > I hope I made it clear.
> >
> > Ditto..
> >
> > > ps. If you want to help I would like to ask you to provide your
> > > answers
> > > in a way that a novice user like me can understand.
> >
> > I hope what I've written above helps you -- but you'll still need to
> > fill
> > in the blanks.
> >
> > > Please remember to CC this list on all your replies.
> > > You can do this by using Reply-To-List or Reply-All.
> >
> > -derek
> >
>
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