Understanding Withholding Tax Codes

If your suppliers are subject to withholding tax, define withholding tax rates so that the system can calculate the withholding tax when you enter supplier vouchers. To do this task, you set up withholding tax codes.

When you set up codes for withholding tax, you specify, among other parameters, the withholding tax type, the percentage, and the base of computation for the tax. For example, the type of withholding tax to which a supplier is subject is Ritenuta d'acconto imposta. Based on this type of withholding tax, vouchers for the supplier are subject to a withholding tax rate that is 20 percent of the total taxable amount.

You can also establish links between different withholding taxes and the codes that you set up for Model 770 reporting.