Withholding Taxes
Prerequisite
To automatically withhold taxes:
- For invoices, Payables defaults the withholding tax group from the supplier site to the invoice and then to the invoice distribution. Accept this default or enter a different withholding tax group for an invoice or invoice distribution. See: Entering Taxes on Invoices.
- For recurring invoices, enter a withholding tax group for a recurring invoice template. When you create invoices, Payables automatically assigns the withholding tax group from the recurring invoice template to all invoice distributions created for each invoice. See: Entering Recurring Invoices.
- For expense reports, assign a withholding tax group to an expense report header. Payables defaults the withholding tax group to all new expense items created for the expense report. Accept or modify the default withholding tax group for each expense item. When you import the expense report using Invoice Import, Payables automatically assigns the withholding tax group assigned to each expense item to the invoice distribution created from the expense item. See: Entering Expense Reports, and Payables Invoice Import Program.
2. Apply withholding tax to invoices:
Payables can automatically apply withholding tax, or you can perform these tasks manually. If you choose to do this manually, you must first enable the Allow Manual Withholding Payables option. If you choose to apply withholding tax automatically, you must choose whether to do this during Approval or during payment processing.
Payables will perform the following for you if you apply automatic withholding tax automatically:
- For each group of invoice distributions assigned with the same withholding tax group, create a negative (positive for Credit/ Debit Memos) Withholding Tax type invoice distribution for each Withholding Tax type tax name in the withholding tax group assigned to the invoice distribution.
- Reduce (increase for Credit/Debit memos) the amount of the invoice to reflect the amount of the withheld tax.
- Reduce (increase for Credit/Debit memos) the amount of the scheduled payments for the invoice to reflect the amount of the withheld tax.