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Withholding Tax Realized - Payment

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Posted on by EY-19060110-0

Hi Experts!

From my testing, I set Realized Withholding Type = Payment. Once i've posted Purchase Invoice with selected WHT Tax Bus. Posting Grp & WHT Tax Prod. Posting Grp, it will post to WHT Tax Entries with unrealized amount, example below.

However, when i apply payment to this invoice in Payment Journal, it shows no WHT Tax Entries will be posted. From my thoughts, i assume will post to WHT Tax entries upon posting the Payment in Payment Journal?

Do you have any ideas about it? Any setup do i missed out?

Thanks in advance!

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Mansi Soni 10,002 Super User 2026 Season 1 on at

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Hello,

In Business Central, when Realized Withholding Type = Payment, the system does not always create new WHT entries during payment posting. Instead, it depends on whether the withholding was already fully recognized at invoice posting and how the realization setup is configured.

In your case, since unrealized WHT entries were already posted at invoice level, the payment journal may not generate additional WHT entries it may only settle or reverse unrealized amounts to realized, rather than creating new entries. That’s why you see no WHT entries will be posted during payment.

You likely have no setup issue; this behavior is standard. You should check the Withholding Tax Setup (realization rules and posting groups) and verify whether realization is expected at invoice or payment stage for your configuration.

https://www.youtube.com/watch?v=d4mYltz4Zwg
https://yzhums.com/71463/

Hope this answer helps you!

If this answer helps you, kindly mark it as a verified answer

Regards,
Mansi Soni

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Saif Ali Sabri 2,570 Moderator on at

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Mansi's explanation is generally correct. When Realized Withholding Type = Payment, posting the purchase invoice typically creates an unrealized WHT entry. The actual realization of the withholding tax occurs when the payment is applied and posted.
A few things to verify:

Payment is applied to the invoice before posting (Applies-to Doc. No./ID is populated).

Withholding Tax Setup is configured for realization on payment and the related posting accounts are defined.

Check whether the system is updating the existing unrealized WHT entry to realized status rather than creating a separate WHT entry. Review the WHT Entries after payment posting to confirm the status change.

If you're using a localization or extension that provides WHT functionality, confirm its specific realization behavior, as some implementations do not create a new WHT entry at payment time.

If the invoice is fully applied and posted, but the unrealized WHT never changes to realized, then it is worth reviewing the localization/extension documentation and setup in more detail.

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EY-19060110-0 51 on at

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Hi Mansi & Saif,

Thanks for your explanation.

The system doesnt update the existing unrealized amount to realized amount, as well as doesnt create G/L entry to post to Payable WHT Tax Account (as setup in WHT Tax Posting Setup), after posting of Payment entry.

Besides, i notice there will no ticked for the field below in Payment Journal, wondering how is the condition for system to auto tick the field?

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Khushbu Rajvi. 22,625 Super User 2026 Season 1 on at

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Please cehck this:https://learn.microsoft.com/en-us/dynamics365/business-central/finance-setup-unrealized-vat

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