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.

Define a different set of withholding tax codes for each municipality, since each can levy its own withholding taxes. You can use the sample withholding tax codes provided as a guide.

For the purposes of printing the withholding tax certificates, assign each withholding tax code the following:

·        A withholding tax key

·        A fiscal regional code

·        An income type

For the purposes of preparing tax returns, assign each withholding tax code to a CIIU code.

Master Data

Assign the appropriate withholding tax codes to your vendor masters and customer 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.