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Community > Feature Requests >

Global Edition - Add Withholding Tax Deductions

Started by Jonathan Fryer in Feature Requests | Idea

In many countries (Philippines, Indonesia, Thailand, Japan etc.) there are withholding tax deductions on domestic payments, for example, rent, marketing or professional services. Similarly, service providers receive their income net of withholding tax.

Therefore one of the key factors for many companies and accountants when selecting an accounting software in these countries will be how the software can handle the withholding tax deductions. I note that in Xero there are workarounds but it isn't as good as being able to make the deduction as the accounts payable / receivable are settled.

Are there any plans to implement a withholding tax deduction functionality in the Global version of Xero?
Official Xero Reply
Hi everyone - we don't have any plans in the short-term to add in Withholding Tax Deductions into the Global Edition of Xero. Sorry I don't have any better news!

The way around this at the moment is to create a liability account called Withholding Tax Deductions. Then when you create your invoice, add a negative line item of the tax amount, and code it to this new liability account (with no tax included). When you pay back this amount to your tax authority, you'd create a Spend Money transaction which is also coded to the liability account - so they contra.

However, I'd highly recommend that you contact your accountant or bookkeeper before you do this, as it may have implications on your tax calculation!

Brittany H (Community Manager)