Withholding Tax Type 

Definition

See withholding tax type. For generic information about withholding tax types, see Defining Withholding Tax Types.

Use

Customizing

You define withholding tax types in Customizing for Financial Accounting (FI), by choosing Financial Accounting Global Settings ® Withholding Tax ® Extended Withholding Tax ® Calculation ® Withholding Tax Type ® Define Withholding Tax Type for Invoice Posting and Define Withholding Tax Type for Payment Posting.

Country Version South Korea comes with two sample withholding tax types. K1 is used for income tax, and K2 is used for inhabitant tax.

All of the withholding tax types are customized so that certificate numbers are not assigned at this level. They are assigned by the programs that you use for printing the withholding tax certificates instead.

In addition, customize the withholding tax types for inhabitant taxes so that they are calculated as a percentage of the income taxes: in the withholding tax types for inhabitant taxes, select Inherit Base. Then specify which tax type must provide the base, in Customizing for FI, by choosing Financial Accounting Global Settings ® Withholding Tax ® Extended Withholding Tax ® Calculation ® Withholding Tax Base Amount ® Portray Dependencies Between Withholding Tax Types.

Master Data

Once you have defined the withholding tax codes and the recipient types, assign the withholding tax types 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.