Profit Withholding Calculations
Profit withholding must be deducted from payments made to suppliers. A withholding certificate is given to the supplier along with the payment to explain why the payment was made for a different amount than was requested on the supplier invoice. The system calculates profit withholding when you create the payment group and deducts the resulting amount from the total payment amount.
Using the first processing option for the PO - PCG process - ARG (P76A570) report, you can specify how the system accrues payments. The following list describes the three options:
Independent Accrual by Company.
Profit concept withholding calculations are performed independently for each company, with no relationship established for payment accruals that exist for other companies or branches. For this reason, the system accrues completed payments for each of the companies that has been set up.
Unique Accrual for All Companies.
The calculation for unique accrual profit withholding means that the system calculates the withholdings based on the sum of all of the accrued payments for all of the companies and branches which were previously set up. As a consequence, no unique accrual of completed payments occurs.
Suppose you have set up two companies, Company A with branch A, and Company B. In this example, the base for the calculation is the sum of payments that are accrued for Company A, its branch, and Company B.
Accrual by Related Company (Parent Number.)
If you specify Accrual by Related Company for the same organizational structure (Company A with a subsidiary branch, and Company B), two scenarios are possible:
If the profit withholdings are calculated when a voucher from Company A or its branch is paid, the base for the calculation is payments accrued for Company A and its branch.
The Company B accrual is not part of the calculation.
If the voucher that is being paid belonged to Company B, only its payment accrual determines the withholding amount. Accruals for Company A and its branch are not a part of the withholding calculation.
The Create Payment Control Group program calls the Profit Withholding Calculation business function (B7600380) for Argentine transactions. This business function:
Uses the first character of the Description 2 field of the 76/03 UDC table to determine whether to calculate profit withholding instead.
Uses the gross amount of the voucher for the base amount for the calculations.
Creates a profit withholding document, called $G, for each voucher in the payment.
(Release 9.2 update) Follow the steps to calculate the profit withholding for non-registered supplier:
Set up the supplier as non-registered in the Address Book (P01012) application.
In the Supplier Master (P04012) application, go to the Tax Information tab.
Enter a value in the Person/Corporation field by selecting a record from UDC H00|TA.
(Release 9.2 update) The profit withholding is calculated based on the special handling code from UDC H00|TA for the specified value entered in the Person/Corporation field.
If the special handling code is C, then Corporate percentage is applied, which is setup in the Work With Profit Withholding Percentage (P760403A) application.
If the special handling code is blank or any other value, then Individual percentage is applied, which is setup in the Work With Profit Withholding Percentage (P760403A) application.
The Withholding Calculation business function (B7600350) called by the Create Payment Control Group program runs a validation process and calls additional processing options for payment groups.
The Create Payment Control Group program uses the voucher's invoice date as the payment date for Argentine transactions for small contributors.