In the Philippines, you use the extended withholding tax functions. This allows you to post a withholding tax amount for a vendor or customer either when you enter an invoice (accrual basis accounting) or when the invoice is paid (cash basis accounting). You must choose one of these methods for posting withholding tax – according to your company's accounting policy – and then adhere to that method of accounting.

To be able to use extended withholding tax, you must define a number of Customizing settings for Financial Accounting: