Withholding Tax Codes

A withholding tax code is the name for a withholding tax rate. Withholding tax codes use Oracle Fusion Tax's regime to rate setup structure.

Regime to rates include:

• Tax regime: The set of tax rules that determines the treatment of one or more taxes administered by a tax authority. The common tax regime setup is one tax regime per country per tax type. The tax requirements are administered by a government tax authority for the entire country.

• Tax: The details for the taxes of a tax regime. Each separate tax in a tax regime includes records for the tax statuses and tax rates that are used to calculate and report on the tax.

• Tax status: The taxable nature of a product or service in the context of a transaction and specific tax on the transaction. For example, one tax can have separate tax statuses for standard, zero, exemptions, penalty, and reduced rates. You define all applicable tax rates and their effective periods for the tax status.

• Tax rate: The rate specified for a tax status and is effective for a period of time. Set up a tax rate record with applicable tax rate detail information per rate period. Rate periods account for changes in tax rates over time.

Creating Withholding Tax Codes

Each tax code is defined within the context of a business unit, country, tax regime code, tax, and tax status code.

For a tax regime and tax, you can select an existing record or create a new record by clicking Create in the list of values. The following table describes the regime to rate options:

Option	Description
Tax Regime	Select an existing tax regime code for the country or create one from within the list of values options. To create a new tax regime record, enter the tax regime code, name, and start date.
Tax	Select an existing tax for the tax regime code or create one from within the list of values options. To create a new tax record, enter the tax, start date, tax currency, tax liability account, tax authority, and tax authority site. For tax authority details, you must associate a supplier with a type of Tax Authority to a withholding tax. You can then create withholding invoices to pay taxes you withheld from your suppliers.
Tax Status	Select a tax status code from the list of: Exempt from tax Tax penalty Reduced tax rate Standard tax rate Zero tax rate
Tax Rate	Enter a unique tax rate code and select a tax rate type of: Percentage Gross amount rate schedule Withheld amount rate schedule

Using Withholding Tax Codes

To use withholding tax codes, assign them to one or more withholding tax classifications. When you define a withholding tax code, you can enable the Create withholding tax classification option to automatically create a classification for that tax code. To handle rate exceptions, define withholding tax certificates for a withholding tax.