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Withholding tax not determine in SAP ByDesign

Jan 09 at 04:51 PM

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Hi Expert,

Our UK company received an invoice from China that has a withholding tax entry on it.We are processing it through supplier invoice but no Withholding tax is determined.

We have maintained Withholding tax at tax management and supplier tax data. we are not using material/services instead product category.

are there any addtional settings that we need to do in order for system to determine WHT.

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1 Answer

Cybil Wang
Jan 10 at 01:34 AM
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Dear Bilal Hashmi,

As you mentioned above, you are using product category , which means you maintain a supplier invoice item without a particular product , you need to maintain one more detail in the Supplier tax data, the withholding tax income type, in order to have the withholding tax calculated automatically.

In general, for automatic WHT calculation, three conditions have to be met:

1. Tax Authority/ Company Tax Arrangement:

Withholding Tax Indicator

  • If the indicator is selected, the company will withhold taxes where applicable.

2. Supplier:

  • Country Code - If no entry is provided for a country, it implies that the supplier is not subject to withholding.
  • Tax Type Code - A tax rate type code can be assigned for a particular country and tax type; in this case, the supplier is subject to withholding.
  • In most cases, there is only one tax rate type code available because withholding tax rates do not depend on the supplier.
  • Tax Rate Type Code - In some countries, there are withholding taxes where the rate is influenced by the supplier; in this case, there are multiple tax rate type codes available.

There is a third precondition which needs to be fulfilled:

3. Product

  • Country Code
  • Tax Type Code
  • Withholding Tax
  • Income Type Code

For more descriptions like system process logic in detail, please kindly refer to help document "Withholding Tax Determination" which can be found in the Help Center of the system.

Best regards.

Cybil

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