Reporting-Only Taxes and Calculation Formulas in Withholding

Use reporting-only withholding taxes and withholding calculation formulas to develop complex tax scenarios and generate temporary tax results before calculating the final withholding tax.

This feature allows you to:

• Create reporting-only withholding taxes to generate intermediate tax amounts that can be used for the final withholding tax calculation.
• Use the withholding taxable basis formula and tax calculation formula to address complex withholding tax calculations, including the use of the assessable value as the taxable amount basis.
• Calculate the Argentina SUSS withholding using a withholding taxable basis formula with an assessable value taxable amount basis type.

For example, an enterprise can use this feature to determine the appropriate withholding amount when legal rules allow different options: using the new Brazilian income withholding tax (IRRF) simplified fixed deduction amount to reduce the taxable basis, or using a calculation based on legal discounts, such as social security tax, alimony, and dependents.

To create a new withholding tax for reporting purposes, enable the Set tax for reporting purpose only option. This ensures that the tax is not accounted for and does not affect transaction totals.

Withholding Taxable Basis Formula

Taxable basis tax formulas are used in the tax calculation process to determine the taxable basis amount for a given transaction line. The taxable basis type, defined in the taxable basis formula, decides the characteristics of the taxable basis amount. The various taxable basis types are:

• Assessable Value: Use this when the transaction line amount doesn't reflect the correct taxable basis from the tax calculation perspective. The assessable value given on the transaction line is considered as the taxable basis amount to calculate tax.
• Line Amount: Use this when the transaction line amount is to be treated as the taxable basis to calculate tax.
• Prior Tax: Use this when there are one or more taxable basis amounts other than the taxes calculated on the transaction line. There is also an option to compound the prior taxes calculated on the transaction line.

The tax details specified in the compounding region define the final taxable basis. The compounding rules are:

• Minimum: Replace the taxable basis with the minimum taxable basis amount of the compounding tax lines.
• Maximum: Replace the taxable basis with the maximum taxable basis amount of the compounding tax lines.
• Add Minimum: Add the minimum taxable basis amount of the compounding tax lines to the taxable basis.
• Add Maximum: Add the maximum taxable basis amount of the compounding tax lines to the taxable basis.
• Subtract Minimum: Subtract the minimum taxable basis amount of the compounding tax lines from the taxable basis.
• Subtract Maximum: Subtract the maximum taxable basis amount of the compounding tax lines from the taxable basis.
• Add: Add the taxable basis amount of the compounding tax lines to the taxable basis.
• Subtract: Subtract the taxable basis amount of the compounding tax lines from the taxable basis.

For example, the system calculates the taxable basis for the BR_WHT_REP_ONLY1 tax and the BR_WHT_REP_ONLY2 tax and uses the maximum amount as the taxable basis for the BR_WHT_FINAL_TAX tax.

Withholding Tax Calculation Formula

The tax calculation formula determines the methodology applied to derive the basic tax amount on a transaction line. The tax amount on a transaction is generally calculated by multiplying the derived tax rate by the taxable basis. In some cases, the tax amount is altered by adding other applicable taxes on the same transaction line. Use a tax calculation formula defined with compounding criteria to address this requirement.

The tax details specified in the tax formula compounding region are added to the calculated tax associated with the tax formula. These compounded tax details can also be enforced by selecting the Enforce Compounding option. When the compounded tax is enforced and not calculated on the transaction, the tax associated with this tax formula is not applicable.

The computing rules for the tax formula are:

• Minimum: Use the minimum tax amount of the compounding tax lines.
• Maximum: Use the maximum tax amount of the compounding tax lines.
• Add Minimum: Add the minimum tax amount of the compounding tax lines to the tax amount.
• Add Maximum: Add the maximum tax amount of the compounding tax lines to the tax amount.
• Subtract Minimum: Subtract the minimum tax amount of the compounding tax lines from the tax amount.
• Subtract Maximum: Subtract the maximum tax amount of the compounding tax lines from the tax amount.
• Add: Add the tax amount of the compounding tax lines to the tax amount.
• Subtract: Subtract the tax amount of the compounding tax lines from the tax amount.