Withholding taxes¶

A withholding tax, also known as retention tax, mandates the payer of a customer invoice to deduct a tax from the payment and remit it to the government. Typically, a tax is included in the subtotal to calculate the total amount paid, while withholding taxes are directly subtracted from the payment.

Configuration¶

In Odoo, a withholding tax is defined by creating a negative tax. To create one, go to Accounting ‣ Configuration ‣ Taxes and, in the Amount field, enter a negative amount.

screenshot: accounting-taxes-retention-negative-amount

menu: Accounting ‣ Configuration ‣ Taxes ‣ New
shows: Tax form of a withholding tax: Tax Computation "Percentage", Tax Type "Sales", Amount "-10.00 %".
highlight: The "Amount" field (red frame).
data: Tax "Retention 10%".
module: account
notes: English UI, light theme, 1440px width, crop to the upper part of the form.

Then, go to the Advanced Options tab and create a retention Tax Group.

screenshot: accounting-taxes-retention-tax-group

menu: Accounting ‣ Configuration ‣ Taxes ‣ (open the withholding tax) ‣ Advanced Options tab
shows: "Advanced Options" tab with the "Tax Group" field set to a "Retention" tax group.
highlight: The "Tax Group" field (red frame).
data: Tax "Retention 10%"; tax group "Retention".
module: account
notes: English UI, light theme, 1440px width, crop to the tab.

Tip

If the retention is a percentage of a regular tax, create a Tax with a Tax Computation as a Group of Taxes. Then, set both the regular tax and the retention one in the Definition tab.

Retention taxes on invoices¶

Once the retention tax has been created, it can be used on customer forms, sales orders, and customer invoices. Several taxes can be applied on a single customer invoice line.

screenshot: accounting-taxes-retention-invoice

menu: Accounting ‣ Customers ‣ Invoices ‣ (open a draft invoice)
shows: Invoice line with two taxes (a regular VAT and "Retention 10%"); the totals block shows the VAT and the negative retention amount.
highlight: The line's Taxes field and the totals block (red frames).
data: Demo customer; taxes "21%" and "Retention 10%".
module: account
notes: English UI, light theme, 1440px width.