---
id: video/d4mYltz4Zwg
type: video
title: "Introducing: Withholding Taxes (2026 release wave 1)"
summary: "Withholding taxes for vendors and the purchase process in Business Central (2026 release wave 1): setup with posting groups, vendor and item configuration, and a demo of invoice posting and unrealized-to-realized entries. Covers limits: no employees or customers, and not available in Australia, New Zealand, India and Italy."
tier: official
language: en
tags:
  - withholding taxes
  - vendor payments
  - posting groups
  - tax calculation
  - invoice posting
  - payment processing
  - localization
  - setup configuration
system: finance
review:
  state: reviewed
  by: opus
  at: "2026-10-07T22:50:29.384Z"
  flags: []
generated:
  at: "2026-10-07T22:50:29.438Z"
  pipeline: 0.2.0
  prompts:
    extract-video: 1
    summarize-video: 2
  input_hash: ccbe0e9786b9d58276a83c7141b58e327fb531734d461c432fc81e6a6ff20872
evidence:
  - kind: video
    url: https://www.youtube.com/watch?v=d4mYltz4Zwg&t=712s
    title: "Withholding Tax for Australia and New Zealand: announced"
    date: "2026-04-01T12:00:38.000Z"
    commit: null
    t: 712
    quote: idea is that in next release we will enable through feature management upgrade process so they can remove from existing model
  - kind: video
    url: https://www.youtube.com/watch?v=d4mYltz4Zwg&t=31s
    title: "Introducing: Withholding Taxes (2026 release wave 1)"
    date: "2026-04-01T12:00:38.000Z"
    commit: null
    t: 31
    quote: currently with this functionality we are covering withholding taxes related to vendors and purchase process
  - kind: video
    url: https://www.youtube.com/watch?v=d4mYltz4Zwg&t=42s
    title: "Introducing: Withholding Taxes (2026 release wave 1)"
    date: "2026-04-01T12:00:38.000Z"
    commit: null
    t: 42
    quote: withholding tax is actually a tax deducted at source from payment before the recipient received the net amount
  - kind: video
    url: https://www.youtube.com/watch?v=d4mYltz4Zwg&t=246s
    title: "Introducing: Withholding Taxes (2026 release wave 1)"
    date: "2026-04-01T12:00:38.000Z"
    commit: null
    t: 246
    quote: With a sequence you can have more than one bit holding tax in the same for same vendor for same uh model in some
  - kind: video
    url: https://www.youtube.com/watch?v=d4mYltz4Zwg&t=314s
    title: "Introducing: Withholding Taxes (2026 release wave 1)"
    date: "2026-04-01T12:00:38.000Z"
    commit: null
    t: 314
    quote: for this vendor and i didn't populate the withholding tax uh posting group system will block posting for
  - kind: video
    url: https://www.youtube.com/watch?v=d4mYltz4Zwg&t=423s
    title: "Introducing: Withholding Taxes (2026 release wave 1)"
    date: "2026-04-01T12:00:38.000Z"
    commit: null
    t: 423
    quote: before I start to work it will not be enabled by default. You need to go to general ledger setup and to enable withholding
  - kind: video
    url: https://www.youtube.com/watch?v=d4mYltz4Zwg&t=656s
    title: "Introducing: Withholding Taxes (2026 release wave 1)"
    date: "2026-04-01T12:00:38.000Z"
    commit: null
    t: 656
    quote: this is enabled as a global app. So this is available everywhere. This everywhere is except these four countries
  - kind: video
    url: https://www.youtube.com/watch?v=d4mYltz4Zwg&t=712s
    title: "Introducing: Withholding Taxes (2026 release wave 1)"
    date: "2026-04-01T12:00:38.000Z"
    commit: null
    t: 712
    quote: in next release we will enable through feature management upgrade process so they can remove from existing model they have right now
links:
  learn: []
  objects:
    - object/table/6786
  features: []
  topics: []
  localizations: []
  videos: []
  posts: []
  guidelines: []
video_id: d4mYltz4Zwg
channel: yt-microsoft
source_name: Microsoft Dynamics 365 Business Central (YouTube)
url: https://www.youtube.com/watch?v=d4mYltz4Zwg
published_at: "2026-04-01T12:00:38.000Z"
duration_s: 808
captions: full
audience:
  - functional consultant
  - administrator
  - partner
chapters:
  - t: 0
    title: Understanding withholding taxes
  - t: 105
    title: How withholding taxes work - workflow example
  - t: 157
    title: Setup architecture and configuration model
  - t: 271
    title: Vendor and item configuration
  - t: 384
    title: Withholding tax setup details
  - t: 455
    title: Demo - purchase invoice posting and calculations
  - t: 627
    title: Demo - unrealized to realized entries
  - t: 641
    title: Limitations, availability and localization
  - t: 770
    title: Resources and closing
features:
  - name: Withholding Tax for Vendors and Purchase Process
    status: unclear
    t: 20
    verified: false
    status_source: video
  - name: Withholding Tax Posting Groups Configuration
    status: unclear
    t: 169
    verified: false
    status_source: video
  - name: Vendor Withholding Tax Enablement
    status: unclear
    t: 271
    verified: false
    status_source: video
  - name: Item Withholding Tax Product Posting Group
    status: unclear
    t: 338
    verified: false
    status_source: video
  - name: Withholding Tax Threshold and Calculation Rules
    status: unclear
    t: 195
    verified: false
    status_source: video
  - name: Invoice vs Payment Withholding Tax Timing
    status: unclear
    t: 55
    verified: false
    status_source: video
  - name: Withholding Tax Base Override
    status: unclear
    t: 568
    verified: false
    status_source: video
  - name: Withholding Tax Posting Preview
    status: unclear
    t: 455
    verified: false
    status_source: video
  - name: Withholding Tax Entries Tracking
    status: unclear
    t: 477
    verified: false
    status_source: video
  - name: General Ledger Setup Requirement
    status: unclear
    t: 423
    verified: false
    status_source: video
  - name: Withholding Tax for Australia and New Zealand
    status: announced
    t: 692
    verified: true
    status_source: video
  - name: Withholding Tax for India and Italy
    status: unclear
    t: 755
    verified: false
    status_source: video
objects_mentioned:
  - table Withholding Tax Posting Setup
  - other Withholding Tax Business Posting Group
  - other Withholding Tax Product Posting Group
  - other General Ledger Setup
  - other Withholding Tax Entries
quotes:
  - t: 31
    text: currently with this functionality we are covering withholding taxes related to vendors and purchase process
    check: exact
  - t: 42
    text: withholding tax is actually a tax deducted at source from payment before the recipient received the net amount
    check: exact
  - t: 246
    text: With a sequence you can have more than one bit holding tax in the same for same vendor for same uh model in some
    check: exact
  - t: 314
    text: for this vendor and i didn't populate the withholding tax uh posting group system will block posting for
    check: fuzzy
  - t: 423
    text: before I start to work it will not be enabled by default. You need to go to general ledger setup and to enable withholding
    check: exact
  - t: 656
    text: this is enabled as a global app. So this is available everywhere. This everywhere is except these four countries
    check: exact
  - t: 712
    text: in next release we will enable through feature management upgrade process so they can remove from existing model they have right now
    check: exact
---

# Introducing: Withholding Taxes (2026 release wave 1)

> Withholding taxes for vendors and the purchase process in Business Central (2026 release wave 1): setup with posting groups, vendor and item configuration, and a demo of invoice posting and unrealized-to-realized entries. Covers limits: no employees or customers, and not available in Australia, New Zealand, India and Italy.

[Watch on YouTube](https://www.youtube.com/watch?v=d4mYltz4Zwg) · Microsoft Dynamics 365 Business Central (YouTube) · 2026-04-01 · 13:28 · tier official · reviewed (checked by Opus)

## Overview

The video introduces withholding tax, described as tax deducted at source from a payment before the recipient receives the net amount. The new capability covers vendors and the purchase process only. It is a global app with no country-specific localization, available everywhere except Australia, New Zealand, India and Italy.

It walks through the configuration model, which uses withholding tax business and product posting groups similar to VAT setup, plus a posting setup with threshold rules and sequences. It then demos purchase invoice posting, the posting preview, and how unrealized entries become realized when payment is made. It closes with limitations and plans for the excluded countries.

## Key points

- The feature is off by default: enable withholding tax in General Ledger Setup and set the minimum withholding tax amount before use. A payment rounding option is also available.
- Vendors are set up on the Invoicing tab: enable withholding tax liable and assign a withholding tax business posting group. Posting is blocked if the group is empty.
- Items can carry a withholding tax product posting group, which sets calculation behavior at item level.
- Withholding Tax Posting Setup supports threshold rules (less than, less than or equal, equal, greater than, greater than or equal), each with its own percentage. Sequences allow several withholding taxes for the same vendor.
- Withholding tax can be realized on invoice or unrealized until payment. Unrealized entries become realized when payment is made, and the posting preview shows base and withholding amounts.
- A base override field changes the calculation base without changing the invoice amount.
- Not covered: employees and customers. Not available in Australia, New Zealand, India and Italy. An upgrade path through feature management for Australia and New Zealand is planned for the next release. India and Italy need separate research.

## Chapters

- [0:00](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=0s) Understanding withholding taxes
- [1:45](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=105s) How withholding taxes work - workflow example
- [2:37](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=157s) Setup architecture and configuration model
- [4:31](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=271s) Vendor and item configuration
- [6:24](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=384s) Withholding tax setup details
- [7:35](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=455s) Demo - purchase invoice posting and calculations
- [10:27](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=627s) Demo - unrealized to realized entries
- [10:41](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=641s) Limitations, availability and localization
- [12:50](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=770s) Resources and closing

## Features

| Feature | Status | At | Evidence |
|---|---|---|---|
| Withholding Tax for Vendors and Purchase Process | status not stated, demoed | [0:20](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=20s) |  |
| Withholding Tax Posting Groups Configuration | status not stated, demoed | [2:49](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=169s) |  |
| Vendor Withholding Tax Enablement | status not stated, demoed | [4:31](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=271s) |  |
| Item Withholding Tax Product Posting Group | status not stated, demoed | [5:38](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=338s) |  |
| Withholding Tax Threshold and Calculation Rules | status not stated, demoed | [3:15](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=195s) |  |
| Invoice vs Payment Withholding Tax Timing | status not stated, demoed | [0:55](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=55s) |  |
| Withholding Tax Base Override | status not stated, demoed | [9:28](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=568s) |  |
| Withholding Tax Posting Preview | status not stated, demoed | [7:35](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=455s) |  |
| Withholding Tax Entries Tracking | status not stated, demoed | [7:57](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=477s) |  |
| General Ledger Setup Requirement | status not stated, demoed | [7:03](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=423s) |  |
| Withholding Tax for Australia and New Zealand | announced | [11:32](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=692s) | "idea is that in next release we will enable through feature management upgrade process so they can remove from existing model" ([11:52](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=712s)) |
| Withholding Tax for India and Italy | status not stated | [12:35](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=755s) |  |

## AL objects mentioned

As heard in the captions. A name that matches one object page by exact type and name links to it; the others stay as named.

- [table 6786 "Withholding Tax Posting Setup"](../objects/table/6786.md) at [3:15](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=195s)
- other "Withholding Tax Business Posting Group" at [3:02](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=182s)
- other "Withholding Tax Product Posting Group" at [3:02](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=182s)
- other "General Ledger Setup" at [7:03](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=423s)
- other "Withholding Tax Entries" at [7:57](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=477s)

## Quotes

- [0:31](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=31s) "currently with this functionality we are covering withholding taxes related to vendors and purchase process"
- [0:42](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=42s) "withholding tax is actually a tax deducted at source from payment before the recipient received the net amount"
- [4:06](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=246s) "With a sequence you can have more than one bit holding tax in the same for same vendor for same uh model in some"
- [5:14](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=314s) "for this vendor and i didn't populate the withholding tax uh posting group system will block posting for"
- [7:03](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=423s) "before I start to work it will not be enabled by default. You need to go to general ledger setup and to enable withholding"
- [10:56](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=656s) "this is enabled as a global app. So this is available everywhere. This everywhere is except these four countries"
- [11:52](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=712s) "in next release we will enable through feature management upgrade process so they can remove from existing model they have right now"

## Disclaimers in the video

- [0:31](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=31s) not-in-this-release: currently with this functionality we are covering withholding taxes related to vendors and purchase process. Employees and customers not included
- [10:56](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=656s) not-in-this-release: currently we do not cover other options. So no employee not customers only purchase process
- [11:08](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=668s) not-in-this-release: This everywhere is except these four countries. Australia, New Zealand, India and Italy
- [11:18](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=678s) other: with no localization. So regardless if you are UK, US, Germany, any countries you will get the same functionality no localization for any specific country in this moment
- [11:52](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=712s) coming-later: in next release we will enable through feature management upgrade process for Australia and New Zealand
- [12:35](https://www.youtube.com/watch?v=d4mYltz4Zwg&t=755s) coming-later: In Italy we have completely different withholding tax. So it will be subject of research. And the same for India

Presenters (as heard): Alexander Totovich.