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Maintain Formulas

In this activity, you define the formulas for a special calculation of withholding tax.

The formulas are needed for the 1042 procedure in the USA and for a special calculation type in Japan, for which the withholding tax is calculated on a scaled basis with the percentage rates dependent on the amount.

You must note the following points when setting up withholding tax formulas for the 1042 procedure common in the USA:

• The currency in the formula should correspond to the currency of the company code.

• You should enter the highest possible value as the To-base amount.

• You should define an entry in which the country is masked with blanks for all countries which you do not define.

• For grants (Income Code 15) divide the annual tax-exempt amount by the number of payments to be expected. This value calculated is entered in the Minimum base amount field.

• In the case of changes to the tax rate, you should create a new code. This way both the percentage rates are displayed separately in reporting.

You can find more information on creating tax codes in the "Define taxes on sales/purchases codes" chapter.

Activities