Set Up Withholding Tax (WHT) on Purchases

Complete the setup checklist:

1. Define Payables Special Calendar.
   1. Navigate to Tax Manager, Setup and Maintenance.
   2. Select Setup: Financials and Transaction Tax.
   3. Search for Manage Withholding Tax Calendar.
   4. Create a Payables Calendar with Type as General Purpose.
   For period-based thresholds, a special calendar is required. If the Slabs (thresholds) are for the entire financial year, then the number of calendar periods should be the one covering the full financial year.
2. Create Classification Category - Bangladesh Vendor Type.
   Give a name, for example BD VENDOR TYPE and complete the Entity Assignment. This table displays the where clause for a table name:

   Table Name	Where Clause
   HZ_PARTIES	WHERE PARTY_TYPE = 'ORGANIZATION'

3. Create Classification Code. Create vendor classification codes as per your business require-ments.For example Goods, OIL-Company/
4. Run the scheduled process - Classification Hierarchy Generation and make sure that the program completes successfully
5. Create Party Fiscal Classification - Bangladesh Vendor Types. Associate a Tax Regime and classification code to Party Fiscal Classification.
6. Assign appropriate classification code at the vendor site for example, Party Site Tax Profile - Classification assignment.
   Note: You may assign different Fiscal Classification Codes to diferent sites of the same vendor per business requirement demands.
7. Set the Configuration Owner Tax Options (COTO) Setup default farameters.You must enable Standard Invoices. If required, enable Prepayment Invoices.
8. Set up a Withholding Tax Regime for Bangladesh.
9. Set up Tax Regime, Jurisdiction, Status, and Rate. The default value is Jurisdiction, Status and Rate.
   Note: You must enable Apply single rate on total taxable basis. This allows tax to be calculated on the older invoices when the Period Level Threshold is exceeded.
10. Set the Tax rate for Tax, for example Setup Tax rate for Tax - (Period - Rate Schedule based).
    Define one rate schedule for each vendor type.
11. Set the tax rule so that the application can derive the tax and tax rate based on the rules.
    You must define Tax Rule - Determining Factor Set, Tax Condition Set, and Tax Applicability Rule.
12. Set the Legal Reporting Unit (LRUs). The Setup LRUs under a BU for an LE. Configure the threshold at the tax level. Map the tax to a regime and associate it to an LRU.
    1. Create Legal Reporting Unit Withholding Tax Registration by selecting Tax Registration Type as Others and Validation Type as ORA_IN_TAN.
    2. In the Registration Number field, enter TAN.