Withholding Tax is a System created Invoice.

System will hold the tax portion

of the invoice before making the payment to the supplier. Below are the
mandatory steps to achieve withholding tax functionality.
1. Enable Withholding Tax at the Payable Options Level
2. Create a Special Calendar for Withholding Tax
3. Create 'Tax Authority' as a Supplier
4. Create Withholding Tax Code (here we give 10% Rate)
5. Create Withholding Tax Group
6. Assign Withholding Tax Group at Payable Options Level
7. Assign Withholding Tax Group at Supplier Level (Normal Supplier level, not
at Tax Authority Supplier level)
Now create a Standard Invoice and Validate it, you will see the withholding
Tax automatically deducted in the invoice.
Now go to Find Invoices screen and select "Tax Authority" Supplier and click
on Go, you will see an invoice automatically created for 10% of the Invoice
amount you have created earlier.
Hope this helps you.