Supplier withholding finance

Supplier withholdings are a collection mechanism: instead of waiting for the supplier to pay taxes, the customer withholds them and remits them. In Panama there are ITBMS withholdings (50% on non-registered suppliers), income tax withholdings on non-residents, and others depending on the service type. For an ERP this requires: a master of withholding types per jurisdiction, calculation logic per supplier nature (resident, non-resident, exempt), generation of the withholding certificate, accounting registration of the withholding as a liability to the tax authority (not as expense), and reports for the monthly filing. A mis-applied withholding is a dual risk: tax audit and supplier relationship (the supplier pays double if no certificate is delivered).