Tax Withholdings on Purchases
The Vendor Tax Retention records the withholding certificate that you, as the withholding agent, issue to a vendor for one or more purchases already billed (VAT/sales tax and/or income tax). When you save it, AdmCloud reduces the open balance of those purchases and generates the accounting entry that moves the withheld amount from your Accounts Payable account to your tax withholding payable accounts.
It's a separate document from the Vendor Bill: you first record the purchase normally, and later, when you withhold tax from the vendor (typically when paying them), you create this retention linking it to the affected documents.
What is it and what is it for?
Each retention indicates the vendor you're withholding from, the currency and exchange rate, and the detail of the affected purchase documents (bills, receptions, expenses or other open purchases) with the amount withheld on each one. For every affected document you choose whether the retention is calculated on the tax (for example, a percentage of the VAT/sales tax billed) or on the total of the purchase (for example, a percentage of income tax), but not both at once on the same line.
When you save it, the withheld amount is subtracted from the affected document's open balance exactly the way a payment would, and AdmCloud posts the transfer: it debits your Accounts Payable account and credits your configured VAT/sales tax or income tax withholding account, as applicable.
Screens in this area
| Screen | What it does |
|---|---|
| List | All the retentions on record, with customizable columns, filters by vendor, subsidiary and date range, and direct access to the Report from its own menu. |
| Create / Edit | A form with the general data (vendor, currency, exchange rate) and the table of affected purchase documents, each with its taxable/base amount and the withheld amount, plus a file attachments tab. |
| Details | A read-only view with buttons for New, Edit, Duplicate, going to the Journal Entry, Print, Void or Delete depending on your privilege, plus the detail of the affected documents. |
| A printable or PDF format of the withholding certificate, with the vendor's data, the detail of the affected documents, and a signature area. |
How to record a retention step by step
- Open it from the list with New and select the vendor you're going to withhold tax from.
- Add the affected purchase documents (bills, receptions, expenses or other open purchases from that vendor) that this retention corresponds to.
- Indicate, for each document, whether the retention is on the tax or on the total and the amount withheld. AdmCloud won't let you set both retention types on the same line.
- Confirm the currency and exchange rate if your company operates in more than one currency (it must be greater than zero).
- Save the document. AdmCloud reduces each affected document's open balance by the withheld amount and immediately posts the transfer to your withholding payable accounts.
Key fields
| Field | What it's for |
|---|---|
| Number | AdmCloud's internal auto-numbering; you can't repeat it or change it once the retention is created. |
| Vendor / Related Party | Who you're withholding tax from; required, can't be voided or inactive. |
| Document Date | Defaults to today's date; must fall within an open Accounts Payable period. |
| Currency and Exchange Rate | Currency of the withholding certificate; the exchange rate must be greater than zero and defaults to 1 if your company operates in a single currency. |
| Subsidiary | Required only if your plan has subsidiaries enabled. |
| Affected Documents | Each bill, reception, expense or other open purchase you're withholding on; it must belong to the same vendor and subsidiary as the retention, and can't be voided. |
| Taxable Income / Base | The amount the retention is calculated on for each affected document: the billed tax or the purchase total, depending on the chosen type. |
| Retention (Tax or Total) | The withholding tax name and the amount withheld on each document; only one of the two types per line. |
| NCF / Fiscal Document Number | Generated automatically on save using your configured Retention fiscal sequence; applies only in countries with this requirement. |
| Attached Files | Backup for the retention (correspondence with the vendor, a copy of the physical certificate, etc.). |
Validations when saving
- The vendor is required and can't be voided or inactive.
- You must add at least one affected document with a retention amount (on tax or on total) equal to or greater than zero.
- Every affected document must have a retention type assigned, either on the tax or on the total; it can't be left without either.
- You can't combine both retention types on the same affected document: if the line uses a retention on the tax, it can't also have an amount for a retention on the total, and vice versa.
- The exchange rate must be greater than zero.
- The Accounts Payable accounting period matching the date must be open.
- Each affected document must belong to the same subsidiary as the retention, can't be voided, and AdmCloud validates its source electronic signature (if applicable) before saving.
- You can't change the document number when editing, nor edit a retention that's already electronically signed.
Delete or void
You can delete a retention only if it has no dependent documents (for example, if it already has an electronic signature on record); in those cases AdmCloud blocks the deletion and you must void it instead. Deleting or voiding automatically restores the balance that had been reduced on each affected document. Voiding keeps the document and its accounting entry for audit purposes but flags it as cancelled.
Reports
From the Reports menu on the list, you can generate a vendor tax withholding report, filterable by date, vendor(s), subsidiary and reference.
Availability, permissions and conditions
- Available from the Basic plan, which includes the Tax Retentions capability; it's not available on lower plans.
- Access is controlled with the "Tax Withholdings on Purchases" permission, with separate levels for viewing, adding, editing, deleting and voiding.
- The NCF / Fiscal Document Number field only applies in countries with this requirement (for example, the Dominican Republic) and depends on the Retention fiscal sequence configured for your company.
- The Subsidiary is only required if your plan has subsidiaries enabled.
Tips and common issues
When should I record the retention? Usually when you pay the vendor, so the withholding certificate and the payment match what was actually disbursed; you can also record it earlier if you already know the amount to withhold.
Does AdmCloud say a line is missing its retention type? Check that every affected document has a withholding tax assigned, either on the billed tax or on the purchase total; no line can be left without either one.
Isn't this the same as a Credit Note? No: a Credit Note is issued by your vendor to reduce what you owe them for a return or discount. The Tax Retention is something you generate, as the withholding agent, to remit part of the purchase's tax to the government instead of paying it to the vendor.