Hi - I did some work abroad recently, that wasn’t liable for VAT - but I was told to expect a 5% deduction for local tax when the payment is made.
When I tag the payment to the invoice, they obviously don’t align. How is the best way to account for the difference. One option I have seen suggests I produce a credit note for the invoice, and then create a second invoice with the correct payment? That seems a little over the top. Any ideas anyone?
Create a holding dummy bank account, log full payment of invoice to it and record transfer of actual amount to main bank. Also thing to watch out if that 5% withholding qualify as tax bill under double taxation treaty or not, usually indirect taxation should not be subject to withholding globally
so I did a mixture. I created a bank account called Overseas Tax, and attributed the balance of the invoice to that bank account - ie just the tax. This is a mixture of what you suggested and Chatgbt. I’ll get my accountant to give me the definitive way to account for it at year end.
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