Withholding Tax Code 

Definition

For generic information about withholding tax codes, see Defining Withholding Tax Codes.

Use

Customizing

Define the withholding tax codes in Customizing for Financial Accounting (FI), by choosing Financial Accounting Global Settings ® Withholding Tax ® Extended Withholding Tax ® Calculation ® Withholding Tax Codes ® Define Withholding Tax Codes.

Country Version South Korea comes with sample tax codes for each of the sample withholding tax types provided.

Since inhabitant tax is calculated as a certain percentage of income tax – normally 10% – you must ensure that the tax codes reflect this. For example if you have a tax code (K3 08) for business income for nonresidents at 20%, you must set the corresponding tax code for inhabitant tax (K4 08) to 2%.

For reporting purposes, assign each withholding tax code to an income type.

Master Data

Assign the appropriate withholding tax codes to your vendor masters.

Day-to-Day Activities

When you enter a document that is liable to tax (for example, when you enter a vendor invoice), the system automatically applies the tax type and tax code appropriate to that vendor or customer.