1. Implementing Payables Invoice to Pay
  2. Withholding Tax Code Rate Types

Withholding Tax Code Rate Types

When you define a withholding tax code, specify the tax rate type to base the withholding tax calculation on a percentage or rate schedule.

The tax rate type values are:

  • Percentage

  • Gross amount rate schedule

  • Withheld amount rate schedule

For each rate type, the same withholding tax code can have different rate period details based on effective periods. For example, the withholding tax rate is 10 percent one year and 11 percent the following year.

Percentage

Select Percentage if a flat rate percentage is required rather than different rates for different amount ranges. For example, if withholding tax is deducted at a specified rate of 10 percent, create a percentage tax rate code with a tax rate of 10 percent.

You can use percentage rates in conjunction with tax threshold controls that are defined at the tax level. For example, withholding for a specific tax is restricted to no more than 10,000 USD for a withholding tax period.

Gross Amount Rate Schedule

Select Gross amount rate schedule to apply different tax rate percentages for different invoice amount ranges. You can define the rate schedule at the document level or period level to include all invoice amounts from a supplier for a specified period. For example, define a tax code that for each year withholds at a rate of 10 percent for the first 10,000 USD in invoice amounts from a supplier. Then, define a rate of 15 percent after the first 10,000 USD.

You can build document or period limits into the rate schedule if necessary, by defining a To amount for the highest amount range.

Withheld Amount Rate Schedule

Select Withheld amount rate schedule to apply different tax rate percentages for different withheld amount ranges. You can define the rate schedule at the document level or period level to include all invoice amounts from a supplier for a specified period. For example, define a tax code that for each year withholds at a rate of 10 percent for the first 1,000 USD in withheld amounts from a supplier. Then, define a rate of 15 percent after the first 1,000 USD.

You can build document or period limits into the rate schedule if necessary, by defining a To amount for the highest amount range.

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