Example of Withholding Tax in Accounts Payable 


Process Flow

Invoice Entry

When entering documents, you can now enter withholding tax data for each vendor line item. The withholding tax is calculated, and where necessary, posted, for each withholding tax type for which a withholding tax code is defined in the withholding tax dialog box. If no withholding tax code is entered for a withholding tax type, the system does not calculate withholding tax.

Depending on the settings you have made for the withholding tax type, you can also enter the withholding tax base and withholding tax amount manually. If you do not enter any amounts, the system calculates them automatically.

Where withholding tax is to be calculated at the time payment is made, only the base amount is calculated when the invoice is posted. Where withholding tax is to be calculated at the time the invoice is posted, the system calculates both the base amount and the withholding tax amount when the invoice is posted.


For the withholding tax type Posting at time of payment, withholding tax is calculated using the data in the open items (withholding tax types, codes, and base amounts). This is the case whether payment is made manually or automatically. The payment amounts are reduced by the withholding tax amounts.

Where outgoing payments are made manually or payment proposals created by the payment program are processed, the withholding tax amounts calculated can be displayed in detail per open item. If you change your open item selection or edit the payment proposal, the withholding tax is recalculated automatically if necessary.


When the payments are posted, the withholding tax data can be displayed in detail in the clearing line items in the payment document.

Withholding tax types with posting on invoice entry are not taken into account for payments. This means that there is no withholding tax data for these types in the payment document.