Withholding Tax Calculation with Calculation Point as Payment

You can process withholding tax at invoice payment with Oracle ERP Cloud.

Here the invoice is paid in Oracle Fusion Payments. At invoice payment, these tax determination processes run for all the withholding taxes with a tax calculation point of Payment:

Process Name	Activities Included	Components Used	Result
Determine Applicable Tax Regimes	Identify the applicable tax regimes	Configuration options for the withholding tax regime	Applicable regime = <User-defined withholding tax regime>
Determine Place of Supply and Tax Jurisdiction	Identify the jurisdiction and place of supply	Direct defaults from the tax definition	Tax jurisdiction = Brazil
Determine Tax Applicability	Consider the taxes based on the tax applicability rule for each tax	Tax Applicability Rules Tax conditions: Bill-FromParty’s Registration Status = Registered Product Type = Services Party Fiscal Classification Supplier = Person	Applicable tax = IRRF_PF
Determine Tax Registration	Determine the party type to derive the tax registration for each applicable tax.	IRRF_PF definition > Tax Rule Defaults > Tax Registration	Bill-from party
Determine Tax Status	Consider the tax statuses of applicable taxes	User-defined tax status: Standard IRRF_PF rule defaults > Indirect Defaults > Tax Status =Standard	Standard
Determine Tax Rate	Consider the tax rates of the applicable tax status	Tax Rate Rules	Applicable tax rates based on ranges: Amount from 0 to 1499.15: Rate=0 Amount from 1499.15 to 2246.75 Rate=7.5 Amount from 2246.75 to 2995.70: Rate=15 Amount from 2995.70 to 3743.19: Rate=22.5 Amount from 3743.19: Rate =27.5
Determine Taxable Basis	Determine the taxable basis on which the tax rate for each tax is applied	Standard Taxable Basis Formula = STANDARD_TB	Taxable Basis = Line Amount of 2000 BRL
Calculate Taxes	Identify the tax calculation formula and calculate taxes	Standard Tax Calculation Formula = STANDARD_TC	Taxable Basis * Tax Rate as per ranges: For 1499.15 BRL, it is 0 For next 500.85 BRL, it is 37.56 Applicable tax rates based on ranges: Amount from 0 to 1499.15: Rate=0 and Tax Amount = 0 Amount from 1499.15 to 2246.75 Rate=7.5 and Tax Amount = 37.56 Amount from 2246.75 to 2995.70: Rate=15 Amount from 2995.70 to 3743.19: Rate=22.5 Amount from 3743.19: Rate =27.5

Withholding Tax Line

After the tax determination process completes, Oracle ERP Cloud inserts tax lines at the summary level, one line for each applicable tax.

Tax Line	Tax Regime	Tax Name	Tax Status	Tax Jurisdiction	Effective Tax Rate	Tax Amount
1	User-defined withholding tax regime	IRRF_PF	Standard	Brazil	1.878%	-37.56 BRL

After the accounting successfully completes, these accounting lines are generated for payment:

Account Class	Account Type	Debit	Credit
Liability	Liability	1780.00
Cash Clearing	Liability		1742.44
Withholding Tax	Liability		37.56
	Total	1780.00	1780.00 BRL

Withholding Tax Invoices

Oracle ERP Cloud generates withholding tax authority invoices to remit withheld taxes to the tax authorities based on your configuration.

Note: You must define the tax authority as a supplier in Payables.

To configure tax authorities, follow these steps:

1. Sign in as a Tax Manager.
2. Click Navigator, Setup and Maintenance.
3. Search for Manage Taxes.
4. Search for a specific tax.
5. Click the Tax Authorities tab.
6. Enter the following values:

Attribute	Values	Comments
Collecting Tax Authority	<your tax authority>	Withholding tax authority defined as a supplier in Payables.
Business Unit	<your business unit>	Business unit that creates the withholding tax invoices.
Collecting Tax Authority Site	<your tax authority site>	Supplier site defined in Payables.

After the invoice validation runs the tax determination process and it successfully completes, Payables automatically creates the invoice for the INSS_PF tax authority for 220 BRL.

Distributions for tax invoice 1 for the INSS_PF tax authority:

Line	Account Class	Distribution Type	Amount
1	Item Expense	Item	220.00
Total:			220.00 BRL

After the accounting successfully completes, Payables create these accounting lines for the invoice:

Account Class	Account Type	Debit	Credit
Item Expense	Liability	220.00
Liability	Liability		220.00
Total		220.00	220.00

After the invoice payment runs the tax determination process and it successfully completes, Payables automatically creates the invoice for the IRRF_PF tax authority for 37.56 BRL.

Distributions for tax invoice 2 for the IRRF_PF tax authority.

Line	Account Class	Distribution Type	Amount
1	Item Expense	Item	37.56
Total			37.56 BRL

After the accounting successfully completes, Payables creates these accounting lines for the invoice:

Account Class	Account Type	Debit	Credit
Item Expense	Liability	37.56
Liability	Liability		37.56
Total		37.56	37.56

You can pay these two invoices in Payments within the stipulated time given by the tax authority (INSS_PF and IRRF_PF) similar to supplier invoices.