If a vendor is exempt from withholding tax for a certain period, you specify the exemption certificate number and the validity date in the Exemption number and Valid to fields in the master record. These fields are company code-dependent.

If the vendor is not completely exempt from withholding tax, you can specify a code that represents the reduced tax rate.

These specifications are needed for the payment transaction. If the exemption is valid on the date of payment, the tax is either not posted at all or only the reduced rate is posted. The exemption certificate number is entered in the payment document automatically.