As you're inputting expenses in your Cashflow, you may have noticed a tick box at the bottom of the pop-up that asks if this certain expense entry has a corresponding Expanded Withholding Tax. Checking this tick box means that you are supposed to withheld a certain percentage of the amount amount from your payment to your supplier as mandated by the BIR by issuing and providing them a 2307 (Certificate of Creditable Tax Withheld at Source). This means that instead of paying them the full amount, you will withhold a certain amount that you will use to pay taxes. The same concept also works when you receive a 2307 when receiving income.
If you have this box ticked, this will automatically redirect you to your Withheld Tax - Issued tab. This generates the Form 2307 that you have to give to your supplier.
It's also important to note that the computation for Expanded Withholding Tax will differ between Non-VAT and VAT filers.
For Non-VAT filers, the EWT will be computed based on the Gross Amount. For VAT filers, the EWT will be computed based on the value net of VAT or before VAT. This means that the VAT value will be deducted first from the Gross Amount before the EWT is computed. As you can see in the image below, it uses the amount in VATable Purchase to derive the Withheld Amount.
It's also important to remember to choose the correct Tax Code in order to derive the Withheld Amount, as the computed amount will depend on whichever tax code it appropriately falls under.
For your interest, it is best to keep the amounts as they are calculated and not edit them so that the proper information will be reflected for your tax forms.
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