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Former Member
Apr 10, 2013 at 08:59 PM

withholding tax scenario


We have the following Withholding tax scenario:

In the vendor master data I have Withholding tax type PR and Withholding tax code 01 (tax rate 7%). Minimum amount is 1500.

Now, suppose 1600 USD has been invoiced and paid for this vendor; tax withheld is 7% of (1600-1500=100) equals USD 7.

Now, suppose, this vendor gets an exemption certificate from the regulatory authority allowing their tax to be withheld at a lower rate, say 3%.

So, we change the vendor master data so it now has Withholding tax type PR and Withholding tax code 02 (tax rate 3%). Minimum amount is 1500.

Now, when we post an invoice for this vendor, it starts calculating again (from zero) for withholding tax towards minimum amount 1500; because the withholding tax code was changed. It does not start to withhold till the minimum amount after the change has exceeded 1500.

Our requirement is that it should not start minimum amount calculation again after the change and continue to withhold (at the new rate) since that vendor

has already exceeded the minimum for the year.

Please let me know.