Extended Withholding Tax (SAP Library

Extended Withholding Tax

Use

With extended withholding tax, you can process withholding tax from both the vendor and customer view.

In Accounts Payable, the vendor is the person subject to tax, and the company code is obligated to deduct withholding tax and pay this over to the tax authorities on the vendor’s behalf. In Accounts Receivable, the company code itself is subject to tax, and the customers that do business with this company code deduct withholding tax and pay this over to the tax authorities on the company code’s behalf. In both cases, the business partner of the person/entity subject to tax deducts the tax and pays it over to the tax authorities.

Integration

SAP provides the following support for transferring data from external or legacy systems with extended withholding tax:

Program	Extended withholding tax supported from Release	Comments
Batch input documents (RFBIBL00)	4.0	No direct Input
Batch input interface for vendors (RFBIKR00)	4.5
Batch input interface for customers (RFBIDE00)	4.6

Prerequisites

Make the required system settings in the Implementation Guide for Financial Accounting. For more information, see Settings for Extended Withholding Tax: Overview.

Features

Withholding tax is calculated and posted to the appropriate withholding tax accounts at different stages, depending on the legal requirements in each country. As a rule, withholding tax is posted at the same time that the payment is posted, in other words the outgoing payment (Accounts Payable) or incoming payment (Accounts Receivable), is reduced by the withholding tax amount.
In certain countries, such as Brazil, the Philippines, and Spain, withholding tax can or must be posted when the invoice is posted. This means that the amount receivable or payable is reduced by the withholding tax amount.
Extended withholding tax supports both concepts.

The key concept in extended withholding tax is the distinction between withholding tax type and withholding tax code. While withholding tax types represent basic calculation rules, specific features of these rules - in particular the percentage rate - are represented by the withholding tax code. You can define any number of withholding tax codes for a given withholding tax type.

If a particular transaction requires more than one kind of withholding tax, this is covered in the SAP System by defining more than one withholding tax type. When entering a line item, you can enter withholding tax data for each of these withholding tax types.

For more information about the functions of extended withholding tax (in comparison to classic withholding tax), see Withholding Tax

The following special features also exist:

In some countries, such as Argentina and Italy, other kinds of posting are required for certain business transactions. Instead of the payment amount being reduced by the withholding tax amount, the withholding tax is posted as an offsetting entry to an expense account You make the relevant settings in the withholding tax code.

Where cleared items are reset, the clearing document is automatically reversed if it contains withholding tax data. For withholding tax types with accumulation, the accumulation base amount is adjusted if the payment document is reversed.