> ## Documentation Index > Fetch the complete documentation index at: https://docs.dualentry.com/llms.txt > Use this file to discover all available pages before exploring further. # How to Set Up Withholding Tax > Add withholding tax rates in Tax Setup and set a vendor's default withholding category, payable account, and tax agency so DualEntry withholds tax on new bills. This guide shows you how to set up withholding tax (WHT) in DualEntry: add the withholding rates you use, then set each vendor's withholding defaults. After completing these steps, new bills and direct expenses for the vendor fill in the vendor's withholding category on each line and calculate the withheld amount. For how withholding tax is calculated and posted, see [Withholding Tax](https://docs.dualentry.com/accountants/core-financials/tax-management/withholding-tax.md). ## Prerequisites Confirm the following before you start: * **Company address**: The company you withhold tax for has an address with a country. DualEntry uses the company's country to decide which rates apply to its records. * **Liability account**: You have a liability account for withheld tax, of type Other Current Liability or Long Term Liability. If you don't have one, create it in your [chart of accounts](https://docs.dualentry.com/accountants/core-financials/general-ledger/create-and-manage-accounts.md). * **Tax agency vendor**: The tax authority you pay withheld tax to exists as a vendor with **Type** set to **Tax Agency**. * **Permissions**: You have the tax permission to create withholding rates, and permission to edit vendors. ## Add a withholding rate A withholding rate is the percentage you withhold for one category of payment in one country. Add one rate for each category you withhold, for example one rate for professional fees and another for rent. If you have companies in more than one country, add each country's rates separately. 1. Navigate to **Configuration → Tax Setup → Withholding Rates**. 2. Select **New Withholding Rate**. 3. In **Country**, select the country the rate belongs to. It must match the country of the company that uses it. 4. In **Category**, enter the name you want to see on bill lines, for example a section code such as `194J` or a description such as `Professional fees`. 5. In **Rate Percentage**, enter the rate as a percentage, for example `10` for 10%. You can enter up to four decimal places, and the rate can't be more than 100%. 6. In **Effective Start Date**, enter the first date the rate applies. Optionally, enter an **Effective End Date**, which must be on or after the start date. 7. Optionally, add a **Description**. 8. Select **Create**. The rate appears in the list with its **Country**, **Category**, **Rate**, **Valid From**, and **Valid To** dates. You can't create two rates with the same country, category, and effective start date. ## Change or retire a withholding rate After you create a rate, its category, country, percentage, and effective start date can't be changed. This keeps the rate on posted records accurate. To edit a rate, open it in the list and select **Edit**. You can change its **Description**, **Effective End Date**, and **Status**, then select **Update**. On system rates, the **Description** can't be changed. When a rate changes, set an **Effective End Date** on the old rate and add a new rate with the new percentage and an **Effective Start Date** for the day after. To stop using a rate, set its **Status** to **Inactive**. Records already saved with a rate keep it after the rate ends or is deactivated, including draft records. New records and records whose date or company you change only accept rates that are active and valid on the record date. If you change the date of a draft bill and its rate isn't valid on the new date, select a valid rate before you save. Ending or deactivating a rate doesn't change the withheld amounts on posted records or on remittances. ## Set a vendor's withholding defaults Vendor defaults fill in the withholding category and payable account on new bills and direct expenses for the vendor, so you don't pick them each time. 1. Open the vendor and select **Edit**. 2. In the **Withholding Tax** section, turn on **Withholding tax applicable**. 3. In **Default withholding category**, select the rate to apply. **Default rate** shows its percentage. 4. In **Default withholding payable account**, select the liability account for the withheld tax. 5. In **Tax agency**, select the vendor you pay the withheld tax to. Only vendors of type **Tax Agency** appear. 6. Save the vendor. The **Withholding Tax** section doesn't appear on intercompany vendors or on vendors of type **Tax Agency**. A vendor can't be its own tax agency. While other vendors or withholding remittances use a vendor as their tax agency, you can't change that vendor's **Type**. When you turn off **Withholding tax applicable**, DualEntry clears the vendor's defaults. Existing records keep their withholding tax, and you can still add a withholding category to a line by hand. ## Troubleshooting These are the most common messages when you set up withholding tax: * **`Withholding tax agency must be a vendor of type Tax agency`**: The vendor selected in **Tax agency** isn't a tax agency. Set that vendor's **Type** to **Tax Agency**, or select a different vendor. * **The default category doesn't fill in on a new bill**: The vendor's default rate fills in only when **Withholding tax applicable** is on and the rate's country matches the company's country. Check the vendor's **Withholding Tax** section and the rate's **Country**. An inactive or expired default rate still fills in, but the line shows an error. * **`The withholding category is not for the country of the company.`**: A bill or direct expense line has a rate from another country. Select a rate for the company's country. * **The payable account isn't listed**: The account isn't a liability account. Use an account of type Other Current Liability or Long Term Liability. ## Next steps * [How to Withhold Tax on Bills, Expenses, and Credits](https://docs.dualentry.com/accountants/core-financials/tax-management/apply-withholding-tax.md) * [How to Remit Withholding Tax](https://docs.dualentry.com/accountants/core-financials/tax-management/remit-withholding-tax.md) This documentation is built and hosted on [Mintlify](https://mintlify.com), a developer documentation platform.