Use

In one business transaction, several kinds of withholding tax may have to be withheld. The SAP System uses withholding tax types to reflect this. Several withholding tax types can be defined in the system; one or more can be assigned in the vendor master record.

The withholding tax type governs the way in which extended withholding tax is calculated and is defined at country level. As far as the time of posting for withholding tax amounts is concerned, there are two different categories of withholding tax types:

Procedure

To make the settings for the withholding tax types, proceed as follows from the Implementation Guide for  Financial Accounting : Financial Accounting Global Settings Withholding Tax Extended Withholding Tax Calculation Withholding Tax Types ... .

Withholding Tax Type for Posting at Time of Invoice

Make the following entries:

Define the name of the withholding tax type.

Define the details for calculating the withholding tax base amounts and the rounding rules for the withholding tax amount.

You also determine whether the withholding tax amount is to be both calculated and posted or only calculated (the latter is the case in France, for example).

You can define dependencies between withholding tax types via the fields Reduced base amount or Inherit base . If the field Reduce base is selected in a withholding tax type, the withholding tax base amount is reduced by the withholding tax amount of the dependent type. Alternatively, you can select the field Inherit base . The withholding tax base amount then corresponds to the withholding tax amount of the dependent type.

You define the dependency between two withholding tax types in a separate activity in the Implementation Guide for  Financial Accounting : Financial Accounting Global Settings Withholding Tax Extended Withholding Tax Calculation Withholding Tax Base amount Portray Dependencies between Withholding Tax Types .

You have the following options for rounding withholding tax amounts:

Furthermore, you can round withholding tax amounts according to the first decimal place for example, or you can apply rounding to amounts without decimal places. You define these rules in a separate activity in the Implementation Guide for  Financial Accounting : Financial Accounting Global Settings Withholding Tax Extended Withholding Tax Calculation Withholding Tax Type Define Rounding Rules for Withholding Tax Types .

Here you define whether withholding tax base amounts and withholding tax amounts should be accumulated for this withholding tax type, and if so, for what period.

If the law permits withholding tax exempt amounts over a specific time period (for example, monthly, annually), the amounts posted in this period must be retained. This ensures that withholding tax is posted as soon as the exempt amount is exceeded. In the SAP System, this is reflected by accumulation. You can accumulate amounts for calendar years, quarters, or months.

If you have activated accumulation for a withholding tax type, the accumulated withholding tax base amount in the current period (month, quarter, year) is added to the withholding tax base amount of the line item for which the withholding tax amount is to be calculated. The withholding tax amount is determined by applying the withholding tax rate or formula (scale) to this total, and subtracting the withholding tax amount accumulated in the period concerned. A formula is a series of staggered withholding tax rates valid for different withholding tax base amount intervals. The current withholding tax base amount and the tax amount itself are added to the corresponding values in the accumulation table. Accumulation is entered per customer/vendor account, withholding tax type, and withholding tax code in the local currency of the company code concerned.

To prevent a withholding tax posting as soon as the accumulated withholding tax amount exceeds a defined maximum, select the field Acc. w/tax to max .

Here you define

You can enter regional codes here. The regional code ensures that the withholding tax is reported and paid to the relevant tax authorities.

Here you define whether you want to maintain minimum and maximum amounts at withholding tax type level or withholding tax code level.

Withholding Tax Type for Posting at Time of Payment

The settings for withholding tax posting at time of payment are generally the same as for posting at the time of invoice entry with the exception of the following:

In addition to defining the details for calculating the base amount and the rounding rules, you also define how cash discount is treated in connection with withholding tax. You determine whether the withholding tax amount is to be calculated before or after subtraction of cash discount.

Here you can also select combined accumulation if amounts are to be accumulated over several vendors or customers.

Additional fields:

This means that self-withholding is permitted for this withholding tax type (that is, vendors subject to tax can pay over the tax themselves).

Here you enter a withholding tax amount that has already been withheld (for example, by a subcompany); this amount is then deducted from the calculated withholding tax amount on payment (only possible with No accumulation and Central invoice proportion .).

Here you can enter the withholding tax amount manually for incoming and outgoing payments for this withholding tax type.

The central invoice function is a special procedure for calculating withholding tax that is used in Argentina. Invoices and debit/credit memos that are linked via the field Invoice reference are processed separately.

Here you can make the following settings:

The central invoice entry method is not used for this withholding tax type.

If you use this withholding tax type, the whole withholding tax amount is posted when the first partial payment is made for the open item. This function is used to calculate the withholding tax based on tax on sales/purchases (Sales Tax Withholding) in Argentina.

The withholding tax base amount is compared to the minimum amount using the total amount of the withholding tax base amounts of the open item together with the related documents, whether or not these were previously selected.

The withholding tax amount is distributed across all partial payments in proportion to the payment amount in the open items. In Argentina, this function is used to calculate withholding tax on income tax and social insurance tax.

Here you define at what level - invoice or payment - minimum checks are carried out. The specification is valid either for the minimum base amount check or the minimum amount check.