How Are Taxes Calculated in a Payment Certificate?
The tax is calculated directly from the total value of the work, completely independently of the retention deduction.
Calculation process:
- Total Work Value: The base value of the work executed in the payment certificate.
- Tax (each tax separately): A direct percentage of the total work value: 3,500 × 15% = 525.
- Total Certified Amount: Total work value + tax amount (or tax amounts). Example: 3,500 + 525 = 4,025.
- Total Retention: A percentage of the original total work value (not the approved amount). Example: 3,500 × 10% = 350.
- Net Amount: Total approved amount − work retention deduction. Example: 4,025 − 350 = 3,675.
- Advance Payment Recovery: When a percentage-based recovery plan is in place, it is calculated from the “Net Amount”. This line does not appear if there is no recovery plan.
- Net Payable: The net amount after deducting the advance payment recovery, if applicable; this is the final amount due for payment.