3 Understanding Supplier Withholding in Mexico

This chapter contains the following topics:

3.1 Understanding Supplier Withholding in Mexico

You must withhold value-added tax (VAT) and income tax amounts from the payments that you make to suppliers of services in Mexico. After you set up the system with legal concepts, withholding concepts, withholding percentages, and other information, you enter vouchers for services. The system uses the information that you set up to associate withholding concepts and percentages with the voucher. When you use the automatic payment process to process payment vouchers, the system calculates VAT and income withholding and creates withholding vouchers. You can manually enter withholding information for manual payments. When you process automatic payments, the system generates a withholding certificate as part of the Update process. You also can generate a withholding certificate for manual payments that you process.

3.2 Working with Supplier Withholding in Mexico

To work with supplier withholding in Mexico, you:

  1. Set up your system with standard information, such as suppliers and bank accounts.

    See Understanding Setup for Supplier Withholding.

  2. Set up the Mexico-specific information required, such as withholding concepts and percentages.

  3. Create vouchers to pay.

    You can create a voucher using the Standard Voucher Entry program (P0411) or the Voucher Match program (P4314). You can also work with supplier withholding in Mexico when you split vouchers, use pay when paid, or log vouchers.

    See Entering Vouchers with Supplier Withholding in Mexico.

  4. Review the VAT and income withholding concepts that the system assigns to vouchers.

    The system assigns the concepts to the vouchers based on your supplier setup. You use the Withholding Additional Information program (P76M411) to review and modify the withholding concepts.

  5. Process payments.

    You can use the manual or automatic payment process to process payments to suppliers.

  6. Print the withholding certificate.

    The system automatically prints the withholding certificate when you run the Update process in the automatic payment process. You must manually generate the withholding certificate for manual payments.


Note:

Vouchers for pre-payments and the electronic data interchange (EDI) process are not supported for supplier withholding in Mexico.