Understanding Withholding Concepts and ISS Exemptions for the Sale of Services

You use the Withholding Concepts Setup - BR program (P76B421) to associate tax type codes with an address book record or item, and to specify whether to calculate withholding for the withholding type. The association with the tax type and the flag to indicate whether to calculate withholding is stored as the withholding concept in the Withholding Concepts Setup table (F76B421).

Note: The system enables you to select a tax type code from the Tax Code table (F76B0401). You use the Review A/P Tax Code program (P76B0401) to set up the tax type codes to use for the withholding calculations for the services that you sell. The system saves the records that you set up in the Review A/P Tax Code program to the F76B0401 table. If appropriate values do not exist in the F76B0401 table, set up appropriate codes before you set up the withholding concepts in the Withholding Concepts Setup - BR program. You set up ISS tax codes in the Taxes Setup by City & Service program (P76B409).

You can set up records for concepts by address book number or by item number; or by both the address book number and item number. At minimum, you must specify either the address book number or the item number. When you enter sales orders, the system uses the values that you set up in the Withholding Concepts Setup - BR program as default values for the withholding concepts to associate with the sales order. The system compares the company address book number and the item number from the sales order to the values in the F76B421 table. If a value exists for the combination of the address book number and item number, the system uses that value as a default value for the withholding information to associate with the sales order record. If the system does not find the combination of company address book number and item number in the F76B421 table, it looks for the item number. If it does not find the item number, it looks for the company address book record. If none of these values exist in the F76B421 table, the system does not provide a default value.

You must select the option to indicate that a withholding type applies to the record that you set up before the system enables the field in which you enter the tax type code. For example, the INSS Concept field is not enabled unless you first select the INSS Subject to Withh. field.

When you run the Generate Nota Fiscal program (R76558B) to calculate the withholding amounts, the system uses the withholding concept that you set up in the Withholding Concepts Setup - BR program to access the tax type information that you set up in the Review A/P Tax Code, Address Book Additional Information - Brazil, and Services ISS Exempt programs. The records include the percentages that the system uses to calculate withholding amounts.