Deduction of Sales Tax

Question

Dear All,
We have new Tax policy according to which we have to deduct 16% sales tax for the vendors who are not registered with tax authorities. For example we procure services of $100 from an unregistered vendor then at the time of invoice we need to have follwing accounting entries:
                     Expense        Debit $100
                     Vendor                                 Credit $84
                     Tax Liability                          Credit $16  (16% of 100)
Tax will be paid to the Government at the end of month.
Kindly suggest how can i handle effeciently it in SAP. Should i need to create some special Sales tax code, with-holding tax or should i use some condition type in PO.
Thanks,
Shahzad Shakoor

Answer 1

Thank you for your reply.
In case we have with-holding tax of 16% then lets suppose we have a services of $100 then at the time of invoice well have following accounting entry:
           Expense           Debit $100
           Vendor                           Credit $100
and at the time of payment with-holding tax will be deducted. This will record $100 in expense but our requirement is to debit $84 in expense and credit $16 in tax liability.
Looking forward for solution.
Regards,
Shahzad Shakoor