Exploring the module: (How to)

Exploring the module: (How to)

The WHT module introduces clarity and traceability throughout the entire invoicing and payment cycle:

• Clear Tax Breakdown: : When a WHT is applied on an invoice, the system transparently displays the withholding amount alongside the invoice total and the net payable. This gives a clear picture of how much is being withheld and why.
• Invoice Line-Level Application: Taxes are not applied in bulk or hidden; they are explicitly attached to individual invoice lines. This allows users, auditors, and customers to see exactly which tax rate was applied to which product or service.
• Detailed Journal Entries: During payment, WHT-related journal entries are automatically created and mapped to the correct accounts. This allows accountants and finance managers to track WHT transactions independently from other financial movements.
• Payment Reconciliation: Since the system deducts WHT from the actual amount received or paid, reconciliations between invoices and payments are fully traceable and aligned with real bank transactions.
• Real-Time Accounting Entries: Every time WHT is applied, corresponding accounting entries are generated instantly. This guarantees up-to-date financial statements without the need for manual adjustments.
• Separate WHT Accounts: Dedicated WHT accounts ensure these taxes do not get mixed with standard revenue or expenses, maintaining clarity and precision in the general ledger.

Open the Invoicing module. Click on the Configuration tab from the menu and select Withholding tax. 1. Enabling Withholding Tax Configuration
• Open the Invoicing module
• Go to the top menu and click on the Configuration tab.
• Select Withholding Tax from the dropdown.

Create and Configure Withholding Tax

• Click Create to define a new WHT tax.
• Fill in the following fields:
  • Name: Give a name (e.g., "Customer WHT 5%").
  • Tax Scope: Choose Sales for customer invoices (you can also configure for Purchases separately).
  • Tax Rates: Define the percentage rate to be applied on invoices (e.g., 5%). These taxes are not applied globally but are selected manually on invoice lines when needed.
  • Default account: The Account to be applied of withholding tax.

• Click Save to store the withholding tax configuration.

• Go to Configuration > Journalsand open your Bank Jounal(e.g, "Bank USD")
• In the Incoming Payments section:
  • Add an account under Outstanding Receipt Account (e.g., "Receivable - WHT").

• In the Outgoing Payments section:
  • Add an account under Outstanding Payment Account (e.g., "Payable - WHT"). This ensures the withholding tax amounts are tracked properly when payments are made.

• Navigate to the Customer Invoices section from the dashboard.
• Click Create and fill out the customer and product/service details.
• On the Invoice Line, after selecting the product:
  • Add the Withholding Tax (WHT) manually from the Taxes field.
  • The pre-configured WHT (e.g., 5%) will be applied to the line it.

After selecting the products, select the pre-configured Withholding tax-WHT on the Invoice line.

• Click Post to validate the invoice
• The system calculates the tax, deducts the WHT from the total, and shows:
  • WHT rate.
  • Tax amount withheld.
  • Net amount payable.

• After posting, click the Register Payment or Pay button.
• Select the appropriate Journal (e.g., Bank Journal).
• Click Create Payment.

The system deducts the WHT from the total invoice and creates accounting entries accordingly.

The module calculates the WHT from and displays the info. Like the WHT rates, the tax amount and the net amount.

We can see that in the Payment journal entries are created. Once payment is confirmed, Odoo generates automatic Journal Entries:

• Debit and credit entries reflecting:
  • The amount received (excluding WHT).
  • The withholding tax amounts.
  • The relevant accounts affected (like Receivables, WHT account).

The Impact of these Entries in General ledger is shown below.