Setting Up Withholding Tax Codes

Important:

This topic pertains to withholding tax in NetSuite accounts that do not have the SuiteTax feature enabled. If you are using a NetSuite account where the SuiteTax feature is enabled, go to Withholding Taxes in SuiteTax.

Withholding tax is no longer being updated for new features and reports in accounts that do not have the SuiteTax feature. All version upgrades of the Withholding Tax SuiteApp include fixes for reported issues only.

Tax codes are used to calculate tax on transactions.

Note:

The Withholding Tax SuiteApp can only support a maximum of 400 withholding tax codes per nexus. If this limit is exceeded, you will get an error on your transaction. To resolve the error, you must inactivate all unused withholding tax codes. For information about inactivating tax codes, see Inactivating or Deleting Withholding Tax Codes.

Creating Withholding Tax Codes

To create a withholding tax code:

Setup > Withholding Tax > Tax Codes.
Click New.
Click the nexus that you are creating a tax code for.
Provide values for the following fields:
1. Tax Code – Enter a name for the tax code.
2. Description – Enter a description for the tax code.
3. Rate – Enter the appropriate withholding tax rate as a percentage. Example: 8%. This percentage will be calculated when you select this withholding tax code in bills or payments.
4. Effective From – Enter the first date this withholding tax code is effective.
5. Valid Until – Enter the latest date this withholding tax code is effective.
6. Percentage of Base – If the withholding tax should be applied to a percentage of the tax base, specify the percentage.
7. Tax Agency – Select the government agency this tax is paid to. You can set up a vendor as a tax agency by selecting Tax Agency in the Category field of the vendor record.
8. Withholding Tax Type – Select the tax type of this withholding tax code.
9. Available On – Select the type of transactions this withholding tax code can be applied to.
10. Subsidiaries – Select the subsidiaries that this withholding tax code should be available in. In the Subsidiaries field, colons separate Parents (on the left) from their Children (on the right). To select multiple subsidiaries, hold down the Ctrl key on your keyboard while clicking each subsidiary.
11. Include Children – Check this box to make this tax code available to children of the selected subsidiaries.
Click Save. The next step to set up tax groups. See Setting Up Withholding Tax Groups.

Editing Withholding Tax Codes

You can make changes to a tax code. For example, if a tax rate changes, you must manually update the Rate field on the tax code record.

To edit an existing withholding tax code:

Go to Setup > Withholding Tax > Tax Codes.
Click Edit next to the code you want to update.
On the Tax Code page, make necessary changes.
Click Save.

Inactivating or Deleting Withholding Tax Codes

If you do not use a tax code and do not want it displayed in your lists, you can inactivate or delete the tax code.

To inactivate a withholding tax code:

Go to Setup > Withholding Tax > Tax Codes.
Click Edit next to the code you want to inactivate.
On the Tax Code page, check the Inactive box.
Click Save.

After saving, this withholding tax code can no longer be selected in transactions, reports, or records.

To delete a withholding tax code:

Go to Setup > Withholding Tax > Tax Codes.
Click Edit next to the withholding tax code record you want to delete.
Click Delete.
Click OK to confirm deletion of the withholding tax code record.

This tax code no longer appears in the Withholding Tax Codes list. Also, you can no longer select this withholding tax code in transactions, reports, or records.