Withholding Tax Specifications
To enable withholding tax to be posted and the amounts to be reported to the vendor and the tax authorities, you must enter certain information in the system.
You must specify a withholding tax code to enable the system to calculate the tax amount. This code is defaulted from the vendor master record when you enter a line item if the vendor is subject to withholding tax.
If a vendor is exempt from withholding tax, you must specify this in the master record. The basis of the withholding tax exemption is an exemption certificate, possibly temporary. In the master record of the vendor, you enter the number of this certificate and the date up to which the exemption is valid. If an exemption exists, the system either posts no withholding tax or the reduced tax rate.
Withholding tax is only relevant for specific posting transactions in certain countries and even there, only for some groups of vendors. You therefore determine, depending on your company code, business partner, and the business transaction, the cases in which the fields for withholding tax become ready for input.
For more information, see:Withholding Tax Codes Withholding Tax Fields Displaying Withholding Tax Fields Defining Forms and Sender Specifications Withholding Tax Exemption Parameters in the Tax Account Withholding Tax: Automatic Postings