What's new in Expense Agent: Calculate WHT for Expenses

0:06 Welcome to business central lunch edition and our session about withholding taxes in expense agent. So before we start I first want to explain what is about what is exactly withholding tax and how we can use this in expense uh agent expense management related to employees. In general withholding tax is tax deducted from a so source from vendor or employee payments. Um in a case of vendor in some situation you need to deduct some taxes when you pay vendors but for employees maybe this is much more common because in some situations you cannot receive any money from your

0:49 uh employees. You need to pay some taxations to your government. So if you are paid more than is uh above some limit you need to pay taxes on top of that. So this is what is about and um in general companies remit to tax authorities on pay's behalf and it can go really complicated. We can use different models uh different calculation justification threshold so on so on. So I will try to explain much more into details but why it is there why it matters because it assure compliance with all local taxes laws. So this is uh there is a small chance that there is any um country

1:30 not required to pay taxes on some payments for employees uh above some limits because for some smaller amounts of course maybe you do not need to pay some situation but above some limits you are definitely supposed to pay taxes. So it reduce definitely uh risk of penalties it uh improve um automation posting compliance and so on. So what is exactly in a business central related to employees and the first place you will see withholding uh tax posting setup.

2:00 This is existing tax posting setup because we already had this earlier for um vendors from previous wave. Now we extended bit holding tax to employees as well. So you will see we have now a few uh fields with additional setup uh to make this more compliance with the employee related topics. So I will show this in a demo much more details just to emphasize. So this this is the same process and any any other taxation this is the same as VAT or with general business posting groups. So you have um withholding posting uh business posting group and withholding product posting group withholding business posting group need to be assigned to employee card and withholding product posting group need to be assigned to

2:44 category uh card. So this is what you need to do. And then when we have this uh extended how to use um what is important to to remember that you can have single uh product posting group uh per category but you can have even more complicated you can have multiple uh product posting group per uh category. Why is that? Because in some situations and most of situations I really hope you need to pay only one tax uh per uh payment but in some situations you are supposed to pay multiple two or three for example state federal tax for some payments.

3:20 So you are able to configure multiple posting business posting groups per category in this case but this is uh up to you. So you need to make a setup based on your local authorities rules. So what else? As you have automatically uh calculation, we need to have again some specific situation how to set up. So you can support both gross or net calculation. It depends what you want because some situation you want to pay thousand dollars for some uh allowance and you need to pay um taxes from this amount.

3:55 So this is a gross but in some situation you want to pay your employee $1,000 and you will pay taxes on a top of that. So you can choose both of these options and then if you have multiple um taxes uh for one uh record as I mentioned because you have multiple product posting groups you can choose simple or compound uh calculation and then we have uh configurable thresholds uh uh per record per period per category per period. So you can see I will show in a demo again much more in um in these details.

4:29 So let's go uh deep dive into the demo. I will first start showing example and then I will explain setup behind the scene. So now I am in expense agent my web app and I want to create my mileage expense. Why I'm using mileage? because I have in a setup that I need to pay taxations if my mileage payment is above $1,000. So to make this I will imagine that I'm traveling from Microsoft link and I will choose to make good trip from Cophagen to Paris.

5:11 So that's a big trip and I can choose I have route one 700 and something miles another 800. So I will keep this shorter only 772 kilome miles sorry and then if I choose by car I will see that I need to pay 1,000 and if I choose same day round trip probably nobody will do uh something similar but let's imagine so I have $2,27

5:41 uh dollars to be paid. So what I need to do I just want to create this expense. Okay. Now I have created you can see $2,000 a little bit more. I can review and I can submit for approval. Reimburse amount 2,000 by cash. So all good. And that's fine. I submitted. I can see that I submitted here. So this is expense report 21. So now I will go back to Business Central.

6:15 Let's look into expense reports. I need to find this expense report. Yes, this is the last one. And I can see okay trip Microsoft to Hayatt Regency all good the same amounts everything is fine. So now if I look into preview posting you will see okay I have GL entry employee ledger entry detail employee ledger entry but I have vit holding tax entry. So how I got this withholding tax entries? If I open this entry, you will see that I have okay posting date. This is what I used basing the purchase invoice.

6:52 So I have base 2,127 and I have amount 425.40. So you can see that this is actually 20%, I will show in the setup how it look like. So this is normal withholding tax user ID all these details are here transaction number so I can go deeper deeper to explain u based in a local currency amount local currency you can see that withholding tax is 20%. So everything is there in entries. So original document number so on so on. So I will not go deeper into all these um entries. I want to go back to show how I have a setup.

7:37 So if I look into withholding posting setup, you will see I will go to edit list that I have withholding tax posting business posting group expenses and I have withholding tax product posting group mileage and then I have withholding threshold type 1,000. So everything above uh 1,000 will be taxable withholding tax in 20%. So now I can choose when to be calculated based on invoice. So this is a moment when I post expense report. So if I want to be calculated in this moment I will choose invoice. If I want to be calculated when I'm paid as a employee in this case I can choose payments.

8:17 So it will be unrealized until I'm paid. So then I have my uh accounts I want to be posted so on. What is important more this is here on the end calculation base. You can choose as I mentioned gross. In this case it was a gross but you can choose net or gross up. So you can choose another way again simple if you have only one this is always simple. If you have multiple then you can choose simple method to calculate it or compound for calculation. We have documentation about this functionality. So please go there to understand how system calculates both simple and compound models.

8:55 And then this one is probably much more important because now looking for employee perspective it can be completely different how we uh in which moment we became liable for taxes. So it can be per record or line. So for each transaction system will calculate if you above threshold or not. In some situation it can be okay it fits but not always. In some other situation it can be per document but much more in especially related to employees uh withholdings this is category per period or total imperial.

9:29 So this is much more often again I cannot say for all authorities and all countries it depends from country to country from rules to rules but you have a lot of options to choose how you want to set up but in this case I used for category in period so for mileage for period but you can use again total in period. So it depends how you want to use if you choose in period you need to choose which period you want to track. So I use month but you can see you have quarter year and fiscal period. So whatever you want to choose but again I said I want for category period period is uh month as as I choose uh uh category I need to set which one category is applied.

10:11 So I choose mileage. What else I need to have set up on employee card? You can find that I have withholding tax uh business posting group. I have dedicated uh posting group. I can say that this person is exempt for taxation again. So this this is possible to be done. And then additional again it depends from country to country. If you if you need some certificates, Bitcoin tax certificate number, Bitcoin certificate type. So you can do if you need it.

10:46 This is not mandatory. And um let's make a look into expense category because I use mileage and then you can see here I have withholding tax posting uh withholding tax group as I use single. You can see you have single or tax group. If this is single, I have mileage. This is what I choose. But if you decide to use group tax group in this case, you need to define here vholding group code.

11:16 And in vit holding group code, you need to create for example for mileage and then you can add multiple uh business posting groups um uh sorry a product posting group related to this uh uh tax group card because if you have federal, state and the local tax or some insurance you need to pay. This is a place where you can configure and then you can set up uh component order how system will calculate one by one. So this is what you need to set up to get this result. So this is every everything about using withholding for uh expenses management. It can be used outside expense management but we will have separate session about finance.

11:53 So you can see much more about withholding tax for employees there. So that's it. Thank you for watching this video.