RE: Argentinian Witholding Tax -- MAPICS-L

Luke,Here is some additional info on vendor withholding:

In the regular withholding method, IFM calculates the amount withheld when you enter the invoice. For example, suppose you have an invoice for 100 and the withholding rate is 10%. In this case, IFM makes an entry to debit (say) expense for 100, credit vendor A/P for 90, and credit to govt. A/P 10. When you pay the invoice, IFM debits vendor A/P for 90 and credits cash for 90. When you pay the government, A/P debits govt. A/P for 10 and credits cash for 10.
In the Argentinean method the amount that must be withheld is NOT KNOWN when you enter the invoice because the amount withheld depends on previous payments. The entries when you enter the invoice for 100 are a debit to expense for 100 and a credit to vendor A/P for 100. When you pay the vendor invoice and the withholding rate is 10%, the entries are a debit to vendor A/P for 100, a credit to cash for 90, and a credit to govt. A/P for 10. When you pay the government, the entries are a debit to vendor A/P for 10 and a credit to cash for 10.

Incidentally, you can use the regular accounting method and have IFM make the entries that it makes when you use the Argentinean method. IFM generates a pseudo-invoice to record the tax withheld. You can have this invoice credited to the vendor A/P account.

In the second scenario where the tax is not withheld from the vendor, I suspect that you are trying to accrue value added tax on imported items--not tax withhold from vendors. You can accomplish this by setting up your Sales/Value tax tables to accrue USE TAX on the invoice. For example, suppose you have an invoice for 100 and the tax rate is 10%.

When you enter the invoice and have the tables set up to accrue use tax, IFM debits expense for 100 and credits vendor A/P for 100. It makes a second entry to debit VAT recoverable for 10 and credit accrued VAT liability for 10.
When you pay the vendor, IFM debits vendor A/P for 100 and credits cash for 100.
When you pay the government, IFM debits accrued VAT liability for 10 and credits cash for 10.

Note: The Use Tax feature applies everywhere--including the US.

My "MAPICS XA International Financial Management Book" explains how this works. You can order this book from www.tenneypubs.com.

Bob Tenney

Tenneypubs.com

404-373-5669 / 1-866-BTENNEY (US)

----- Original Message -----

From:

To: MAPICS-L@midrange.com

Sent: 05/16/01 11:37:10 PM

Subject: RE: Argentinian Witholding Tax

Thank you for your reply Bob

Let me check if I have understood you correctly. If the company were to pay a vendor for his services and the company is under legal obligation to withhold five percent from the gross payment. Then IFM will deduct five percent upon payment. I am assuming both manual payments and payment list will use this feature.

In Thailand, there are two forms of withholding tax methods - one is triggered upon on entry of transaction and accrued. (IFM can handle this) The second is triggered upon payment. Both are mutually exclusive. This means if the withhold tax is accrued, then withhold tax is not deducted again upon payment. If the withhold tax has not been accrued, it will be deducted upon payment.

In Asia, the most common method of withhold tax is performed upon payment of services and not accrued during entry of transaction.

I need more details(preferably an example) on how it functions since you have stated that it is dependent on type of vendors and previous payments made during the year.

regards

Luke Yap

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Bob Tenney

tenneypubs.com

404-373-5669 / 1-866-BTENNEY