Processing of Offline Withholding Tax Certificates 

Purpose

This process illustrates what to do if you have to issue a certificate without the system, and how you enter the certificate information in the system afterwards. The process flow below explains what steps are involved by means of an example.

Process Flow

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       1.      An employee of your company, Bao Yin, registers for a seminar to be held by an external consulting company. The consulting company sends you an invoice.

According to the conditions of payment, Bao has to pay the fee in cash on the day the seminar is held. However, you do not know what rate of tax to withhold.

       2.      The day before the seminar, Bao goes to the cashier, who issues him with enough cash to cover the seminar fee and with a blank withholding tax certificate (consisting of an original and one carbon copy).

The disbursements account is a balance sheet account with open item management. To make the posting, the cashier uses an expense transaction in the cash journal.

       3.      The next day, Bao attends the seminar and afterwards, pays the instructor.

The seminar fee is THB 11,000 gross. The withholding tax amount is 5% of the net amount, THB 10,000, so Bao pays the instructor THB 10,500 (THB 11,000 – THB 500). He also fills out a preprinted withholding tax certificate for the THB 500 by hand, one copy of which he gives to the instructor. The instructor gives the employee a receipt for the cash paid.

       4.      The following day, Bao returns to work. He takes the receipt and his copy of the withholding tax certificate to the cashier. He also returns the THB 4,500 that he has not spent:

The cashier enters a vendor invoice as follows:

In the system, the vendor master record is assigned to a withholding tax type that deducts the withholding tax when an invoice is entered. That is why the system is able to generate a withholding tax item now.

The cashier then generates a withholding tax certificate from the withholding tax item, and the system generates a sequential number, which it assigns to the withholding tax item. The cashier notes the sequential number on the copy of the certificate that Bao brought with him.

Finally, the cashier clears the vendor invoice against the payment as follows:

Result

The process is now at a close. The only difficulty is that the consulting company does not have a note of the sequential number. However, the company may request Bao to notify it of the sequential number once it has been issued.