Withholding Tax Codes 
The withholding tax code defines the following:
Calculation of the Tax Base
You specify whether the invoice amount, including the tax on sales/purchases, is to be used as the tax base amount.
Taxable Amount
You specify the percentage of the tax base to be used to calculate withholding tax.
Rate of Taxation
You specify the percentage of the taxable amount to be paid or reported to the tax office.
Reduced Rate
A reduced tax rate can be entered in place of the alternative tax rate. Given a valid exemption certificate, the system calculates the withholding tax amount using this rate.
Posting Withholding Tax
You determine whether the amount is to be paid to the authorities (in which case it must be posted to a separate account) or only reported.
The above information is country-specific. These codes are used for the following purposes:
To determine the tax amount automatically
To determine automatically the tax accounts to which the tax amount is to be posted
To assign a certain tax rate to a line item
Note
The definitions for the codes for withholding tax must not be changed or deleted while there are still outstanding items in the system posted under the code in question. If you do not observe this rule, you may find errors occur when carrying out payment transactions.
For information on how to define and maintain withholding tax codes, see the Implementation Guide for
Financial Accounting
under
Withholding Tax
Maintain Tax Codes.
See also
Configuring the System Using the Implementation Guide
.