I have an issue with withholding tax. We have set up classic withholding tax for one of our subsidiaries in Mexico. When we ship parts or any equipment from America to Mexico, it is not subjected to withholding tax. But when we (america company) does any service work in Mexico, then it is subjected to withholding tax. How to handle a situation like this? I mean, under my Mexico company code we have only one vendor set up as america company and america company provides both parts and service. For parts there is no withholding but for service there is. I have only one vendor master.
If i enter withholding tax code in the vendor master, then any purchase either parts or service will fall under withholding and if I dont how would i calculate for service?
Also, a situation arises that there is both parts and service how to handle?
Any input in this regards is highly appreciated.