Clearing with Extended Withholding Tax 

Use

For withholding tax types with posting at time of payment, the withholding tax is calculated and posted when open items are paid.

When you clear open items without a payment (transfer posting), no withholding tax is posted.

If you implement extended withholding tax, you cannot carry out the following functions when processing open items or clearing items automatically:

If you select these functions, your selections are reset and the system displays an appropriate message.

Features

Manual Posting with Clearing

For postings with clearing, the system calculates and, if necessary, posts the withholding tax for the withholding tax types with Posting at time of payment. Any withholding tax amounts you may have entered manually override those calculated by the system.

An open item can only be activated if, at the time it is cleared, the withholding tax information it contains is still relevant. This will depend on the date the document was entered and the posting date of the payment. For more information about the relevance of withholding tax types, see Defining Liability to Tax and Deduction Authorization. If an open item is not active, all withholding tax amounts are zero.

The system recalculates all withholding tax amounts for all open items if you:

If you recalculate the withholding tax amounts for an active open item, these amounts can change due to the Customizing settings for withholding tax types. This may be the case, for example, if you have defined withholding tax after cash discount or accumulation for this withholding tax type.

The total of withholding tax amounts for all open items is displayed in the appropriate field in the lower half of the withholding tax screen. The system takes this figure into account when determining the total amount to be cleared. Note however that this total amount does not include withholding tax amounts posted as Offsetting entry to G/L account/No reduction in subledger, Self-withholding or Offsetting entry to G/L account .

When you post or simulate the payment document, the total withholding tax amounts are subtracted from the payment amount. The withholding tax amounts are posted to the G/L accounts specified in the account determination in Customizing for the withholding tax types/codes.

Those withholding tax amounts posted as Offsetting entry to G/L account/No reduction in subledger, Self-withholding or Offsetting entry to G/L account do not reduce the payment amount, even though the system makes a posting to a withholding tax account. Instead of the payment line item being reduced, an offsetting entry is made to a G/L account in accordance with the account determination defined for the transaction key in question.

Automatic Clearing (Payment Program)

The payment proposal includes information about potential inconsistencies in a business partner’s withholding tax status and in the open items. If the relevant withholding tax types for an open item are different to the relevant withholding tax types when the payment is posted, this is an inconsistency and the system adds these open items to the exception list. You have to change each document in the exception list individually.
For more information about the relevance of withholding tax types, see Defining Liability to Tax and Deduction Authorization.

As is the case for manual payment transactions, the payment program also supports payment of withholding tax calculated for more than one document. In this case, the withholding tax amount is not calculated on a single line item but on all the selected line items linked by the invoice reference. With the exception of withholding tax types for which accumulation is active, this calculation method is restricted to open items cleared by a single payment document.

When you call up the payment proposal, you can have the system recalculate the withholding tax at any time. When you save the proposal, the system always recalculates the withholding tax. When you call up the proposal, you can display the withholding tax data for every individual document.

Special Features of Incoming Payments

Differences in Withholding Tax

If the withholding tax amount withheld by your customer differs from the withholding tax amounts calculated by the system, you can enter and post the tax amount withheld by your customer manually in place of the amount calculated by the system. In the withholding tax dialog box, you can enter the tax amount withheld by your customer for every open item. You can use this function for any withholding tax type (setting WT acc. to payment in withholding tax type); it is not dependent on the settings you made in Customizing for manual entry of withholding tax amounts during document entry (setting Manual w/tax amount in withholding tax type). If you enter withholding tax amounts in this way, the system posts them without checking these amounts.

Self-Withholding

If self-withholding applies to a given withholding tax type, the withholding tax amount is posted to a second G/L account instead of being deducted from the incoming payment amount.

In order to be able to use the self-withholding function, you must select the field Self-withholding in Customizing for the withholding tax type. You can select a standard self-withholding setting for each company code and withholding tax type (Calc. self-withholding): For manual payments, you can then decide in each case whether this setting should apply for all open items in connection with this withholding tax type. For automatic payments, postings are either generally made with self-withholding if the field Calc. self-withholding is selected, or without self-withholding if the field is not selected.