Calculate withholding taxes for vendors

Enabled for	Public preview	General availability
Users, automatically	Apr 1, 2026	Jun 2026

Business value

Business Central customers can benefit from features for setting up, calculating, and reporting withholding taxes for vendors in all countries/regions where it’s relevant. You no longer need to source a non-Microsoft application or create a customization because withholding tax functionality is built into the standard version of Business Central.

Feature details

In some countries/regions, companies must pay withholding tax to the government for certain third‑party services or vendor purchases. Business Central calculates withholding tax when you pay a vendor invoice, or when you post it, based on your setup. The tax amount is withheld from the payment and reduces the total amount owed to the vendor.

You can configure withholding tax by setting up Withholding Tax Codes and Vendors.

Get started

To enable withholding tax calculation, open the General Ledger Setup page and turn it on. Next, configure the Withholding Tax Revenue Types, including their sequences and posting groups. Then, set up the following:

• Withholding Tax Bus. Post. Group and apply it to vendors that are subject to withholding tax.
• Withholding Tax Prod. Post. Group and apply it to items or general ledger accounts.
• Withholding Tax Posting Setup (using the two groups above).

If needed, you can override the product posting group on purchase document lines using the Withholding Tax Prod. Post. Group field.

Using withholding tax

Withholding tax applies automatically when you're working with purchase documents. When you post a document that includes withholding tax, Business Central creates a withholding tax entry. You can also use the Calculate and post withholding tax settlements action to process withholding tax for a specific period based on the withholding tax entries you already posted.

Geographic areas

Visit the Explore Feature Geography report for Microsoft Azure areas where this feature is planned or available.

Language availability

Visit the Explore Feature Language report for information on this feature's availability.

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