Calculate base on gross amount calculation

Dear forum,
I would like to ask how does the system calculate the tax base on gross amount.
Assuming the tax rate is 17% and the tax base amount is $1000.
I do know that system will split the amount into 2 parts where the tax related account is 854.70 and the tax account is 145.30.
The calculation is 1000/1.17 to get 854.70 but I still do not know why to get 1.17.
Need advice.
Thanks

Hi Gengis,
The system calculates by default the tax taking the invoice amount as gross amount. i.e. 1000 * 17/117 = 145.30 doller.
However this setting can be changed to calculate the tax amount taking invoice amount as net amount in the below way:-
1. For all users:-
Activate the tick "tax base in net value" in company code setting in transaction OBY6.
2. For specific user:-
Activate the tick "Calculate taxes on net amount" in transaction FB00 from that user login.
Then the system will calculate the tax amount as 1000 * 17% = 170 doller.
Let me know if you need any further help.
Regards,
Gaurav

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Dear all
First of all, I would like to underline that before to post in this forum I have read all the documentation (official and not official) related to the Withholding Tax configuration in SAP, but in the end I have some doubts and so I kindly ask you cooperation to better understand the logical of the system.
In our country (ITLAY) the withholding tax (WTH tax) must be withheld at the payment invoice to the vendor, so our system should automatically calculate and posts the amount to the right tax account; my question is: which setting we have to use in order to have the right calculation of the base amount?
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At the Invoice Entry SIDE when entering documents, if the withholding tax is to be calculated at the time payment is made, only the base amount is calculated when the invoice is posted, this is what we are looking for, so my question is:
How does the system calculate the base amount of WTH tax?
Maybe an example could be better to explain our request:
Invoice received from a Tax adviser that is liable to Withholding tax.
1.     Invoice Total Amount                                                  1372
2.     Fees (Tax Base amount and WHT Tax base amount)                         1000
3.     Specific Italian Contribution     (Tax Base amount and NO WHT Tax base amount)          20
4.     Social Security Contribution     (Tax Base amount and WHT Tax base amount)          40
5.     Expenses reimbursement (NO Tax Base amount and NO WHT Tax base amount)          100
6.     VAT Basis (point 2 + 3 + 4)                                             1060
7.     VAT Amount (20%)                                                  212
8.     Withholding Tax Basis (point 2 + 4)                                        1040
9.     Withholding Tax Amount (20%)                                        208
Is it possible to manage this flow under the Invoice Verification FLOW? It means:
1.     Issue a Purchase Order to the TAX consultant
2.     post the GR for services
3.     post the IR, in this step the System should calculate the WTH base amount 1040
4.     post the payment and the WTH TAX
Accounting flow is:
Point 2) post the GR for services
         Credit      Balance Sheet GRIR services account                                   -1040
         Debit      P&L Account for services                                             1040
Point 3) post the IR
        Credit      Vendor Account                                                   -1372
        Debit      Balance Sheet GRIR services account                                    1040
                       WTH TAX BASE AMOUNT
        Debit      P&L Account Expenses reimbursement                                   100
                        NO TAX BASE AMOUNT AND NO WHT TAX BASE AMOUNT
        Debit      P&L Account Specific Italian Contribution                                   20
                        TAX BASE AMOUNT AND NO WHT TAX BASE AMOUNT
       Debit     Balance Sheet Tax Account                                             212
Point 4) post payment to the vendor
      Debit      Vendor Account                                                   1372
      Credit      Balance Sheet WTH TAX ACCOUNT                                   -208
     Credit      Balance Sheet Bank Account                                             -1164
I have just one doubt: for the calculation of the WTH TAX base amount the system consider the amount/value of the GR, so in this case 1040 or the system will take in consideration all the item for the VAT TAX BASE AMOUNT, so in this case 1060?
I am asking this because I found on the SAP documentation, when it explain the Withholding Tax Type Calculation Setting:
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I know my request is not so clear, and I have to apologize with you because it is very long, but please someone can help me
Regards
Marco

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Dear Experts,
I am using tax code (ZS) with 10%, 2% and 1%.
when i am posting FB60 by using this tax code its calculating tax amounts wrongly.
For example i am posting Rs.20000/-
when system has to calculate..
Vendor Cr                         20,000/-
Expense Dr                      17,940/-
Sevice tax On OH Dr          2,000/-
ECS on OH   Dr                     40/-
SEC on OH   Dr                     20/-
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Vendor Cr                         20,000.00
Expense Dr                      18,132.37
Sevice tax On OH               1,813.24
ECS on OH                             36.26
SEC on OH                            18.13
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Dear Anil
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The form of invoice would be in the following form :
Expense of Service Recd                      20000 (Excl of Tax)
Add : Serv Tax @10%                            2000
Add : Ecess & SHCess                             60
Total Invoice Amt.                                22060 (Incl of Tax)
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Exp .....                               Dr. 20000
Serv Tax                              Dr.    2000
Ecess & SHcess                  Dr.      60
To     Vendor                              22060
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Exp .....                               Dr. 18,132.37
Serv Tax                              Dr.   1,813.24
Ecess & SHcess                  Dr.      54.39
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Check this
[Re: Tax inclusive in base price|Tax inclusive in base price;
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First time caller, long time listener here.
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===============================================================================
Payment Block Key
Use
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Calculate base on gross amount calculation

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