Considerations for Profit Gross Up

When you enter the voucher, add an additional line with the calculated gross up amount, a tax explanation code of E, and the tax area associated with 0 percent tax.

For example, suppose that the retention quota for payments to foreigners is 10 percent and that the amount to pay is 1000 USD.

If it had been agreed that the foreign payee would receive a tax-free amount of 1000 USD, the grossed up amount would be 1111 USD. Ten percent of 1000 USD is 111 USD (withholding), and the foreign payee thus receives 1000 USD (1111 USD – 111 USD). For this reason, the voucher must have two lines: one for 1000 USD with the amount's corresponding tax area, and another for 111 USD with a tax explanation code of E and a tax area defined in UDC 76A/AC, as shown in this example:

Pay Item	Gross Amount	Tax Ex	Tax Rate/Area
001	1.000,00	V	EXENTO
002	111,00	E	ACRECENTA

Note: If you need to exclude the gross up amount from the Purchase VAT Subledger, you must exclude the detail lines of vouchers with a tax area that is defined for gross ups. To do this exclusion, you must ensure that the supplier is set up with the most current data in the Country and Person/Corporation Code fields on the Address Book Revision form and in the A/B Legal Document Type - Argentina and Tax ID fields on the A/B Additional Information - Revision form.