Withholding Tax 
Withholding Tax
Use
In Mexico, you are obliged to withhold tax on a range of payments. For Mexico, you use the
Extended Withholding Tax solution.
Features
In Mexico, you are required to collect tax on a variety of expenditures, including:
You retain and remit half of the VAT on purchases; the vendor is responsible for paying the other half.
A vendor invoices you for services rendered. The invoice comes to MXN 10,000 plus VAT at 15%, MXN 1,500 – in total, MXN 11,500. You pay the vendor MXN 7,750 – the invoice value less income tax at 30% and half of the VAT at 15%.
When you create a company code using the template for Mexico, the system sets up Extended Withholding Tax according to Mexican requirements.
In Mexico, you withhold tax when you make a payment and not when you receive and invoice; you use the extended withholding tax functions.