2Withholding Taxes

This chapter contains the following:

Manage Withholding Taxes

Enter and update withholding tax lines according to the requirements of your transactions. Depending on your security settings and options specified during tax setup, you can:

  • Enter manual withholding tax lines

  • Change existing withholding tax line amounts

  • Cancel withholding tax lines

Entering Manual Withholding Tax Lines

The following must be enabled for you to enter manual withholding tax lines:

  • Allow entry of manual tax lines option for the withholding tax

  • Allow Manual Withholding option for the configuration owner and application event class

To enter a manual withholding tax line:

  1. In the Withholding Taxes tab, click Edit Taxes and add a row.

  2. Enter a rate name. You can't enter a manual withholding tax line for a withholding tax that already exists for the transaction.

  3. Change the withholding tax amount if necessary. You can only enter a withholding tax amount up to the unpaid amount on the document.

The Edit Taxes region is only accessible for paid documents if the option to Allow adjustments to paid invoices in Manage Invoice Options allows it.

The Edit Taxes region includes the status of the tax authority invoice for each tax. If the status is created, use the link to view the tax authority invoice details, such as invoice number, creation date, amount in the tax currency, validation status, and paid status.

Editing Withholding Tax Line Amount

The following must be enabled for you to change a withholding tax line amount:

  • Allow override of calculated tax lines option for the withholding tax

  • Allow Manual Withholding option for the configuration owner and application event class

To change a withholding tax line amount:

  1. In the Withholding Taxes tab, click Edit Taxes.

  2. Change the existing tax line amount.

You can only update withholding tax amounts for existing tax lines before a document is validated.

Canceling Withholding Tax Lines

The following must be enabled for you to cancel withholding tax lines:

  • Allow override of calculated tax lines option for the withholding tax

  • Allow Manual Withholding option for the configuration owner and application event class

To cancel a withholding tax line:

  1. In the Withholding Taxes tab, click Edit Taxes.

  2. Select the withholding tax line to cancel and click Cancel in the Actions menu.

You can't cancel a withholding tax line after there has been a payment on the invoice.

Note: If you update an invoice after validation, such as changing a line amount, withholding tax lines with a calculation point of Invoice, are only recalculated on re-validation if all of the existing withholding tax lines are canceled before re-validation.

Set up a rate schedule to control the tax rates applicable on a transaction based on each document or on accumulated tax amounts and taxable basis amounts in defined periods.

Define rate schedules at the following levels:

  • Withholding tax: Define rate schedules to be based on each document or on accumulated tax amounts and taxable basis amounts in defined periods. For period-based rate schedules, specify the withholding tax calendar to be used for defining the periods. You can also control whether a single rate should be applied to the total taxable basis or multiple rates.

  • Withholding tax rate: Specify if the tax rate schedule is based on gross amount or withheld amount. Define the amount ranges and percentage rate for each range. You can have different amounts and rate percentages for a tax rate based on effective periods.

The following examples illustrate how withholding tax is calculated based on defined rate schedules.

Rate Schedule Based on a Document with a Tax Rate Type of Gross Amount

Define rate threshold setup as:

Schedule Basis Apply Single Rate Tax Rate Type From Amount To Amount Rate Percentage

Document

Blank

Gross amount

0

1000

5%

 

 

 

1000

5000

10%

 

 

 

5000

 

15%

The withholding tax on an invoice for 6000 is calculated as: (1000 * 5%) + (4000 * 10%) + (1000 * 15%) = 600.

If you define the apply single rate, the withholding tax is calculated as: 6000 * 15% = 900 because 6000 falls in the 15% range of over 5000.

Rate Schedule Based on Period with a Tax Rate Type of Withheld Amount

Define rate threshold setup as:

Schedule Basis Apply Single Rate Tax Rate Type From Amount To Amount Rate Percentage

Period

Blank

Amount withheld

0

50

5%

 

 

 

50

500

10%

 

 

 

500

 

15%

The withholding tax is calculated based on:

  • 0 to 50 at 5% is equal to a gross amount of 0 to 1000. For example, a withheld amount of 50 at 5% is equal to 1000 * 5% .

  • 50 to 500 at 10% is equal to a gross amount of 1000 to 5000. For example, a withheld amount of 500 at 10% is equal to 5000 * 10%.

The first invoice in a period for the amount of 4000 is calculated as: (1000 * 5%) + (3000 * 10%) = 350. The accumulated tax amount is 350 and the accumulated taxable basis is 4000.

The second invoice in a period for the amount of 3000 is calculated as: (1000 * 5%) + (4000 * 10%) + (2000 * 15%) = 750 less the current accumulated tax amount of 350 = 400. The accumulated tax amount becomes 750 and the accumulated taxable basis is 7000, which is the first and second invoice added together.

FAQs for Withholding Taxes

How can I review withholding taxes?

You can review withholding tax on the summary or detail tax lines of the invoice. You can also view the tax rules evaluated for the existing withholding taxes.

Here's a list of views that apply to withholding taxes:

View Navigation Notes

Summary withholding tax lines

Edit Invoice page > Taxes section > Withholding Taxes tab

You can review withholding taxes with a calculation point of Invoice before the invoice is validated. If you update the invoice before validation, recalculate withholding by using the refresh option in the Withholding Taxes tab.

Detail withholding tax lines

Edit Invoice page > Taxes section > Withholding Taxes tab > Actions menu > Manage Tax Details

You can review the detail withholding tax lines, which include tax lines that are canceled.

Tax rules

Edit Invoice page > Taxes section > Withholding Taxes tab > Actions menu > Manage Tax Details > Actions menu > View Tax Rules Evaluated

You can review the tax rules that are evaluated for the withholding taxes.

Note: The withholding tax amounts that appear in the summary and detail tax lines are in the entered currency.