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How to Account for Withholding Tax

id : 38   cat : Accounting   
How do you treat the withheld tax in the books? Assuming you are the consultant paid from TZ and 15%has been with held.....do you Dr the tax account with the amount or do you treat it as an allowable expense?
Asked by : Nganga Mwangi
 DOQ : 2016-06-02 21:00:00
   Nganga Mwangi

Answer

WHT : Let me start with the accounting. WHT unlike VAT you cannot offset WHT deducted on payments and that suffered on receipts from customers. Second, WHT is deducted from supplier payments and payable to KRA by the 20th of the next month. Hence it is a TAX liability. It follows that one entry is a CREDIT to WHT payable. Since amounts due to creditors is reduced by WHT deducted this is recorded in the books by a DEBIT entry to the creditors ledger. If no DTA exists then WHT suffered should be treated as an expense.
Answered by : John Muiruri
 DOA : 2016-06-06
   John Muiruri
Comments
As in case with TZ
   Nganga Mwangi    Nganga Mwangi  2016-06-06 21:00:00


Other Answers



0

Hope i have gotten the question.Any witheld tax is a payable to KRA ie Dr the consultant with the withheld amount and Cr withheld amount as a payable.When making payment to KRA Dr the withheld tax account and Cr bank.
 votesDOWN : 0    votesUP : 0
: David Ngatho  DOA   2016-06-02 21:00:00

my Suggested answer
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