Withholding Taxes
Use
The SAP System handles withholding taxes in Accounts Receivable (FI-AR). When you enter a customer payment, the system automatically calculates the taxes withheld by your customer and makes the corresponding accounting postings. And if, later on, you have to make a payment to your customer (for example, if you issue a credit memo), the system automatically calculates how much tax you have to withhold.
In order for these functions to work in FI-AR, the sales documents in Sales and Distribution (SD) must include the appropriate withholding tax types and codes.
Activities
Customizing
Create the
withholding tax types and codes that you need. Note that in accounts receivable, the system only supports withholding taxes that are levied at the time of payment. Country Version Thailand comes with one such sample tax type, R1.Customize your
pricing procedures as described in the documentation below.Master Data
Enter the appropriate withholding tax types and codes to the customer master records of customers that withhold tax from you.
Create
condition records for the withholding taxes.Day-to-Day Activities
When you
create a sales order, the system automatically determines which withholding tax code will apply later, when the customer pays the invoice. The withholding tax code is contained in the pricing procedure assigned to the line items.When you
create a billing document for the sales order and release it to Financial Accounting (FI), the system creates a customer invoice in FI with a customer line item as usual. The customer line item contains the appropriate withholding tax codes.When your customer pays you, you
enter the payment as normal. The system deducts the appropriate amount of withholding tax and sends you the remainder. When you enter the payment in the system, the system automatically calculates how much tax the customer has withheld and posts this amount to a separate withholding tax account.If you then have to create a credit memo for the customer, or any other form of reimbursement, the system automatically withholds tax on the payment that you make, using the withholding tax code that you have entered in the customer master record.