WT to reduce ST withholding
Hi guys
The client needs a WT which would reduce the state taxable wages NOT federal. Is it possible just through the processing classes or do you think even the tax models also need to be modified.
Any suggestions is appreciated.
Thanks
W
Not sure
State Taxes are fixed or might be changed according to law
firstly we shd know the whole functionality of State Taxes
later we shd check whether tthis Reduceing amount is fixed or not fixed
the other thing is we can check in PCL level and also at PCR level
this is just a try ..............
Similar Messages
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NRA withholding for payments to Foreign vendors
Hi
I would like to discuss with configurators from other US companies as to how they have implemented NRA withholding.
In particular, how they handle varying tax rates for certain countries under tax treaties.
Thanks
DeepaHow to determine the amount to be withheld
Question 16: If a payment to a foreign person (foreign vendor) is determined to be FDAP and U.S. sourced, how much should be withheld?
Answer 16: The statutory withholding rate is generally 30%. This rate should be generally applied to the gross amount of the payment. See Q&A-19 below concerning this rate.
Question 17: When should the tax is withheld?
Answer 17: Withholding is required at the time that the payment is made. A payment is considered to be made when the beneficial owner of the payment realizes income. There does not need to be a transfer of cash or other property.
Question 18: When should the tax withheld be deposited?
Answer 18: The amount of tax that the US withholding agent and is required to withhold determines the frequency of the deposits. The frequency could be annual, monthly, or quarter-monthly. Publication 515 details the specific rules for making deposits including the deposit due dates, which forms to use, electronic deposit requirements and penalties for failure to make deposits timely.
Question 19: Can the statutory rate (30%) be reduced?
Answer 19: If the foreign vendor is a resident in a country that has a tax treaty with the United States, the rate may be reduced. Each treaty has specific provisions which determine the reduced withholding rate. These provisions reduce the withholding rate based on the type of income and the status of the recipient.
Question 20: Is there a listing of treaties and rates to be applied?
Answer 20: Publication 515 provides a listing of tax treaties and the withholding tax rates to be applied to various types of income under each treaty. The Publication 515 is located on the IRS website which is www.irs.gov.
Question 21: How can a foreign vendor certify its foreign status?
Answer 21: The foreign vendor must provide the withholding agent with form
a properly completed W-8 or Form 8233 (see FAQ section 5 for further information).
5. How should the withholding agent properly document the foreign status or treaty claim of a foreign person
Question 22: Must we obtain documentation from a foreign person to support its claim of foreign status or treaty eligibility?
Answer 22: In order to reduce the amount that is required to be withheld on a payment of U.S. sourced FDAP income to a foreign person (foreign vendor), or to exempt such a payment from withholding tax, the withholding agent must have documentation from the foreign vendor to certify its non-U.S. status and, if applicable, its eligibility for the treaty benefits claimed. Such documentation must be submitted by the foreign vendor in the form of a Form W8-IMY Form W-8 or Form 8233.
Question 23: Which forms would be most commonly used by foreign vendors?
Answer 23: Form W-8BEN (Beneficial Owner), Form W-8IMY (Intermediary), Form W-8ECI (Effectively Connected Income) and Form 8233.
Question 24: When should Form W-8BEN be used by foreign vendors?
Answer 24: Form W-8BEN should be used by the foreign vendor to certify that it has non-U.S. status. If a treaty claim is made by the vendor Part II of the
W-8BEN must be completed to be eligible for the treaty benefits.
Question 25: When should Form W-8ECI be used by our foreign vendors?
Answer 25: Form W-8ECI should be used by a foreign vendor to certify that the payment is income that is effectively connected with a U.S. trade or business. No withholding is required on such income. Rather, such income must be on some cases, a W8-BEN can be provided by a U.S. Branchu2019s income tax.
Question 26: When should Form 8233 be completed by a foreign vendor?
Answer 26: If you make a payment to a non-resident alien individual as compensation for personal services performed for you in the United States, that individual may have to provide you with Form 8233 instead of Form W-8. See Form 8233 and its instructions for further information.
Question 27: Are we responsible for the validity of the documentation presented to us by the foreign vendor?
Answer 27: In order to rely on the documentation, it must be valid. In order to be valid, the documentation must meet the requirements of Treasury Regulation 1.1441 and must be completed in accordance with the applicable Form instructions (see Instructions for the Requester of Forms W-8BEN, W-8ECI, W-8EXP and W-8IMY).
In addition, in order for the documentation to be valid, the US withholding agent or multi-national must not know, or have reason to know, that the information provided on the documentation is unreliable or incorrect. If the US withholding agent (multi-national) has such knowledge, or if the documentation is invalid for any reason, the withholding agent must apply the presumption rules set forth in Treasury Regulation Section 1.1441, 1.
Question 28: When should the Form W-8 or Form 8233 be obtained from the foreign vendor?
Answer 28: In general, the documentation must be in the possession of the withholding agent at the time of payment.
6. How to report NRA payments and withholding
Question 29: What forms should we use to report payments to foreign persons (foreign vendors) of FDAP income that is U.S. sourced and any amounts withheld on such payments?
Answer 29: Forms 1042, 1042-S and 1042-T are the forms that a withholding agent (multi-national) must use to report payments to foreign persons of FDAP income that is U.S. sourced and any amounts withheld on such payments.
Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons should be submitted to the IRS in order to report the total aggregate NRA payments, withholdings and deposits made by the withholding agent during the applicable year.
Form 1042-S, Foreign Personu2019s U.S. Source Income subject to Withholding is an information return. The withholding agent should submit these information returns to the IRS and the payee in order to report the payments and withholdings made during the year that are specific to the payee, the type of income paid and the withholding rate. Form 1042-T, Annual Summary and Transmittal of Forms 1042-S should be used to transmit paper Forms 1042-S to the IRS.
7. What to expect from an IRS audit regarding NRA reporting and withholding responsibilities
Question 30: If upon audit, it is determined that there has been under reporting and under withholding, will the IRS assess penalties and interest in addition to the under withholding amounts due?
Answer 30: If deficiencies in reporting, withholding and depositing with regard to NRA payments are found on audit, the IRS will consider all applicable penalties, including, but not limited to the following:
Failure to file (IRC Section 6651)
Failure to pay (IRC Section 6651)
Failure to deposit (IRC Section 6656)
Failure to file information returns (IRC Sections 6721-6723)
Negligence (IRC Section 6662)
In addition, interest will be assessed on the under withholding.
Question 31: If upon audit, it is determined that there has been under withholding, on account of a failure to document any vendors, as described above what recourse does the withholding agent have in order to reduce the under withholding?
Answer 31: The withholding agent can obtain certification of foreign status and the treaty claim from the foreign vendor. This is accomplished by the vendor completing a valid Form W-8. A valid Form W-8 will allow a reduction in the under withholding from the 30% statutory rate for the type of income paid.
Since the documentation is being obtained after the payment is made, the foreign vendor should provide an additional statement indicating that all facts and elections made on the Form W-8 were true, correct and complete at the time of the payment. Documentation other than this statement might be considered based on the facts of the particular case.
Question 32: If the under withholding has been u201Ccuredu201D by obtaining a
Form W-8 or other applicable documentation after a payment, according to
Q&A-31 above and such documentation is found sufficient is there any remaining liability to the withholding agent?
Answer 32: In general, there is no remaining liability for tax, interest and penalties. Exceptions to this apply in case in which the withholding agent is relieved from the tax liability by showing that the underwithholding tax was paid by the payee. In those cases, the withholding agent may still be liable for interest and applicable penalties. In other cases, reporting-related penalties might still apply where no underwithholding results on account of the cure, but the filed Form 1042-S reflected incorrect information. -
Hello Experts,
Can any one explain or send docs for Configuration of witholding tax configuration for Customers
[email protected]Configuration Guide
1 Overview
This configuration guide provides the information you need to set up the configuration for withholding tax under Financial Accounting. It covers configuration relating, classic withholding tax, extended withholding tax.
2 Configuration
2.1 Organization structure
2.1.1 Organization Setup Step
N.A
2.1.1.1 Use
N.A
2.1.1.2 Prerequisites
N.A
2.1.1.3 Procedure
1. Access the activity using the following navigation options:
Transaction Code SPRO
IMG Menu <IMG Menu path>
2. On the Overview screen, make the following entries:
Field Name Description Usage Remarks
- In above table enter the field name, description, and usage of every relevant field.
- In the table below, list down all the actual values set up in the client. Add or delete columns as necessary.
<Field -1> <Field -2> <Field -3> <Field -4>
Value 1-1 Value 2-1 Value 3-1 Value 4-1
2.2 Process Configuration for withholding Tax
The following are the configuration steps for Withholding tax.
2.2.1 Classic withholding Tax
Maintain Countries
Maintain Types of Recipient
Define Income Types
Maintain Tax Codes
Define Form Names for Extended Reporting
Define Output Groups
2.2.1.1 Maintain Countries
The withholding tax country is needed for printing the withholding tax form. Since the list of country IDs prescribed by law is different from the list in the system, you have to define the withholding tax countries again.
2.2.1.1.1 Use
Used For printing the withholding tax forms.
2.2.1.1.2 Prerequisites
N.A
2.2.1.1.3 Procedure
3. Access the activity using the following navigation options:
Transaction Code SPRO
IMG Menu IMG Menu Path :
Financial Accounting  Financial Accounting Global Settings  Withholding Tax Withholding Tax Basic Settings Maintain Countries
4. On the Overview screen, make the following entries:
Field Name Description Usage Remarks
Country Key country key contains information which the system uses to check entries such as the length of the postal code or bank account number
Withholding tax country An additional country is needed for calculating or reporting withholding tax.
Description Text of country
2.2.1.2 Maintain Types of Recipient
The type of recipient categorizes the vendor, which is necessary for printing the withholding tax form.
2.2.1.2.1 Use
Used For printing the withholding tax forms.
2.2.1.2.2 Prerequisites
N.A
2.2.1.2.3 Procedure
5. Access the activity using the following navigation options:
Transaction Code SPRO
IMG Menu IMG Menu Path :
Financial Accounting  Financial Accounting Global Settings  Withholding Tax Withholding Tax Basic Settings  Maintain Types of Recipient
6. On the Overview screen, make the following entries:
Field Name Description Usage Remarks
Country Key country key contains information which the system uses to check entries such as the length of the postal code or bank account number
Rec. Type Type of recipient"
Description Description of recipient type
2.2.1.3 Define Income Types
The income type is a classification of your (foreign) vendors according to income.
2.2.1.3.1 Use
You need the income type as a specification for the withholding tax return...
2.2.1.3.2 Prerequisites
N.A
2.2.1.3.3 Procedure
7. Access the activity using the following navigation options:
Transaction Code SPRO
IMG Menu IMG Menu Path :
Financial Accounting  Financial Accounting Global Settings  Withholding Tax Withholding Tax Basic Settings  Define Income Types
8. On the Overview screen, make the following entries:
Field Name Description Usage Remarks
Income type Type of income subject to withholding tax
Text Description of income type
2.2.1.4 Maintain Tax Codes
The income type is a classification of your (foreign) vendors according to income.
2.2.1.4.1 Use
You need the income type as a specification for the withholding tax return...
2.2.1.4.2 Prerequisites
N.A
2.2.1.4.3 Procedure
9. Access the activity using the following navigation options:
Transaction Code OBC7
IMG Menu IMG Menu Path :
Financial Accounting  Financial Accounting Global Settings  Withholding Tax Withholding Tax Calculation Maintain Tax Codes
10. On the Overview screen, make the following entries:
Field Name Description Usage Remarks
Country The country key contains information which the system uses to check entries such as the length of the postal code or bank account number.
W.tax code The tax codes are unique per country
Description Text of the tax code
Off.w. tax .code Key which is used for withholding tax reporting on official forms.
Percentage subject to tax Portion of the invoiced amounts which are subject to tax with the above-mentioned withholding tax code
Net base for tax contributions Indicator that the taxes on sales/purchases are not used in the base amount for withholding tax.
Currency Currency of the minimum amount defined for the withholding tax report
Minimum Amount Field used define minimum tax it is used for Japan only N.A
Withholding tax rate Percentage rate used in conjunction with the withholding tax base amount to calculate the withholding tax amount
Reduced Rate Percentage rate which is to be used for the withholding tax base amount if there is a valid exemption certificate, to calculate the withholding tax amount
Withh. tax formula withholding tax is to be calculated according to a special procedure
Germ. reunification tax German Reunification Tax for the Withholding Tax N.A
Posting with payment The payment amount is reduced by the withholding tax amount posted
Region The region forms part of the address
Provincal tax code Together with the country key, the region and the withholding tax class,the fiscal province code defines a reporting key that is required for reporting withholding tax (DME) and by the tax authorities (Spain). N.A
Income type Type of income subject to withholding tax
2.2.1.5 Define Accounts for Withholding Tax
You define the account numbers of your withholding tax accounts. The system posts the tax amount to these accounts when clearing open items.
2.2.1.5.1 Use
Used for document posting in FI.
2.2.1.5.2 Prerequisites
N.A
2.2.1.5.3 Procedure
11. Access the activity using the following navigation options:
Transaction Code OBYS
IMG Menu Path :
Financial Accounting  Financial Accounting Global Settings  Withholding Tax Withholding Tax Postings Define Accounts for Withholding Tax
12. On the Overview screen, make the following entries:
Field Name Description Usage Remarks
Transaction QST The transaction keys are used to determine accounts or posting keys for line items which are created automatically by the system.
Tax code used to differentiate account determination
Account GL account no.
2.2.1.6 Define Form Names for Extended Reporting
You define the names of the forms for the withholding tax return to your vendors.
2.2.1.6.1 Use
You can use the form ID to define country-specific forms.
2.2.1.6.2 Prerequisites
Form should be there
Company code
2.2.1.6.3 Procedure
13. Access the activity using the following navigation options:
Transaction Code SPRO
IMG Menu Path :
Financial Accounting  Financial Accounting Global Settings  Withholding Tax Withholding Tax Reporting Define Form Names for Extended Reporting
14. On the Overview screen, make the following entries:
Field Name Description Usage Remarks
Program name The name of the program you want to edit
Company code The company code is an organizational unit within financial accounting.
Form ID The identification for a form or a form set enables you to access a particular form or set of forms from a selected group of forms
Form Form which is to be displayed
2.2.1.7 Define Output Groups
You define the combination of outputs which is required for a given data source
You would define two output groups in Customizing:
One to define the data selection (accounts payable, etc.) and the form and file to be used.
One to define a data selection (accounts receivable, etc.) and the list to be used.
2.2.1.7.1 Use
You can for different reporting purpose..
2.2.1.7.2 Prerequisites
Form
DME Engine
2.2.1.7.3 Procedure
15. Access the activity using the following navigation options:
Transaction Code SPRO
IMG Menu Path :
Financial Accounting  Financial Accounting Global Settings  Withholding Tax Withholding Tax Generic Withholding Tax Reporting Define Output Groups
16. On the Overview screen, make the following entries:
Field Name Description Usage Remarks
Process Type type of process that will be triggered by the program
Output Group Indicates the output group as used in withholding tax reporting. An output group is the combination of outputs which is required for a given data .
Customizing view withholding tax scheme in your country
Reported doc. You can choose in which context the withholding tax data is to be displayed
Open items selecting this option will allow you to see also the open items
Group item according to fiscal year items belonging to vendor/customer B are listed together with items of vendor/customer A if A is specified as fiscal address of B.
No exemptn data Excludes data relating to withholding tax exemption
No tax data Excludes data relating to taxes on sales/purchases
Title of output list focused on The output list is divided into four sections, covering Various information
Form printing Description for printing form
DME File Using this parameter, you can control whether the data medium exchange should be carried out to a temporary sequential file
Format tree Used together with the DMEE tree type to uniquely identify a format tree
Tax Ref.1 There is a parameter type for every additional parameter for a company code
Tax Ref.2 There is a parameter type for every additional parameter for a company code
User Program Your report should contain a form
2.2.2 Extended withholding Tax
Withholding tax Country
Extended withholding tax Malaysia, Singapore, Brunei, Nepal ,Thailand
Check Withholding Tax Countries
Define Withholding Tax Codes
Check Recipient Types
Define Income Types
Define Withholding Tax Type for Invoice Posting
Define Withholding Tax Type for Payment Posting
Define Rounding Rule for Withholding Tax Type
Define Withholding Tax Codes
Define Formulas for Calculating Withholding Tax
Portray Dependencies Between Withholding Tax Types
Define Min/Max Amounts for Withholding Tax Codes
Assign Withholding Tax Types to Company Codes
Activate Extended Withholding Tax
Define Accounts for Withholding Tax to be Paid Over
Define Accts for W/hold.Tax for "Gross.Up" Offsetting Entry
Define Accounts for Self-Withholding Tax
Define Accounts for Withholding Tax Offsetting Entry
Define Numbering Classes
Define Numbering Groups
Define Number Ranges
Assign Numbering Group to Numbering Class
Assign Numbering Group to Numbering Class
Numbering Concept Option 1: Assign Numbering Class
Numbering Concept 4: Assign Numbering Group
Assign Forms for Withholding Tax Certificates
Define Minimum Amounts per Withholding Tax Code
Define Output Groups
2.2.2.1 Check Withholding Tax Countries
The withholding tax country is needed for printing the withholding tax form. Since the list of country IDs prescribed by law is different from the list in the system, you have to define the withholding tax countries again.
2.2.2.1.1 Use
Used For printing the withholding tax forms.
2.2.2.1.2 Prerequisites
N.A
2.2.2.1.3 Procedure
17. Access the activity using the following navigation options:
Transaction Code SPRO
IMG Menu IMG Menu Path :
Financial Accounting  Financial Accounting Global Settings  Withholding Tax Extended Withholding Taxs Basic Settings  Check Withholding Tax Countries
18. On the Overview screen, make the following entries:
Field Name Description Usage Remarks
Country Key country key contains information which the system uses to check entries such as the length of the postal code or bank account number
Withholding tax country An additional country is needed for calculating or reporting withholding tax.
Description Text of country
2.2.2.2 Define Withholding Tax Codes
If your national tax authorities use withholding tax keys to identify the different withholding tax types, you can define these official names for your tax codes here.
2.2.2.2.1 Use
System can therefore assign the withholding tax items to the correct withholding tax return.
2.2.2.2.2 Prerequisites
N.A
2.2.2.2.3 Procedure
19. Access the activity using the following navigation options:
Transaction Code SPRO
IMG Menu IMG Menu Path :
Financial Accounting  Financial Accounting Global Settings  Withholding Tax Extended Withholding Taxs Basic Settings  Define Withholding Tax Codes
20. On the Overview screen, make the following entries:
Field Name Description Usage Remarks
Official Key Official withholding tax codes are defined which must be included in official reports.
Name Description of official key
National tax code With this value you can classify every official tax key. This information is required on certain legal reports
Country Off. w/tax key Nat. Tax Code Text (40 characters)
NP COMN Commission
NP CONT Contractors
NP DIVD Dividends
NP INTR Interest
NP MANT Maintenance
NP PROF Professional
NP RENT Rent
2.2.2.3 Check Recipient Types
The type of recipient categorizes the vendor, which is necessary for printing the withholding tax form.
2.2.2.3.1 Use
To print from for vendors.
2.2.2.3.2 Prerequisites
N.A
2.2.2.3.3 Procedure
21. Access the activity using the following navigation options:
Transaction Code SPRO
IMG Menu IMG Menu Path :
Financial Accounting  Financial Accounting Global Settings  Withholding Tax Extended Withholding Taxs Basic Settings  Check Recipient Types
22. On the Overview screen, make the following entries:
Field Name Description Usage Remarks
With holding tax type This indicator is used to classify the different types of withholding tax
Rec. Type The type of recipient can be defined in the vendor master record
Text Description of Rec. type
Country Withhld tax type Recipient type Text
NP I1 NR Non - residents
NP I1 PN Person Not Registered
NP I1 PR Person Registered
NP P1 NR Non - residents
NP P1 PN Person Not Registered
NP P1 PR Person Registered
TH I1 3 Phaw.Ngaw.Daw. 03
TH I1 53 Phaw.Ngaw.Daw. 53
TH I1 54 Phaw.Ngaw.Daw. 54
TH I2 3 Phaw.Ngaw.Daw. 03
TH I2 53 Phaw.Ngaw.Daw. 53
TH I2 54 Phaw.Ngaw.Daw. 54
TH P1 3 Phaw.Ngaw.Daw. 03
TH P1 53 Phaw.Ngaw.Daw. 53
TH P1 54 Phaw.Ngaw.Daw. 54
TH P2 3 Phaw.Ngaw.Daw. 03
TH P2 53 Phaw.Ngaw.Daw. 53
TH P2 54 Phaw.Ngaw.Daw. 54
TH W1 2 Phaw.Ngaw.Daw. 02
TH W1 3 Phaw.Ngaw.Daw. 03
TH W1 53 Phaw.Ngaw.Daw. 53
TH W1 54 Phaw.Ngaw.Daw. 54
TH WP 2 Phaw.Ngaw.Daw. 02
TH WP 3 Phaw.Ngaw.Daw. 03
TH WP 53 Phaw.Ngaw.Daw. 53
TH WP 54 Phaw.Ngaw.Daw. 54
2.2.2.4 Define Income Types
The income type is a classification of your (foreign) vendors according to income.
2.2.2.4.1 Use
You need the income type as a specification for the withholding tax return...
2.2.2.4.2 Prerequisites
N.A
2.2.2.4.3 Procedure
23. Access the activity using the following navigation options:
Transaction Code SPRO
IMG Menu IMG Menu Path :
Financial Accounting  Financial Accounting Global Settings  Withholding Tax Withholding Tax Extended Withholding Taxs  Define Income Types
24. On the Overview screen, make the following entries:
Field Name Description Usage Remarks
Income type Type of income subject to withholding tax
Text Description of income type
2.2.2.5 Define Withholding Tax Type for Invoice Posting
You define the withholding tax type for the posting at the time of entering an invoice. This withholding tax type does not have any effect on the payment.
2.2.2.5.1 Use
The withholding tax type used for the posting at the time of entering an invoice.
2.2.2.5.2 Prerequisites
N.A
2.2.2.5.3 Procedure
25. Access the activity using the following navigation options:
Transaction Code SPRO
IMG Menu IMG Menu Path :
Financial Accounting  Financial Accounting Global Settings  Withholding Tax Withholding Tax Extended Withholding Taxs  Calculation  Withholding Tax Type  Define Withholding Tax Type for Invoice Posting
26. On the Overview screen, make the following entries:
Field Name Description Usage Remarks
Country The country key contains information which the system uses to check entries
Withhld tax type This indicator is used to classify the different types of withholding tax
W/TAX type No. By numbering withholding tax types, you can have withholding tax calculated in a particular sequence
Base amount Net amount,
Modif net amount.
Gross amount,
Tax amount ,
Modif tax amount ,
Inherit base,
Base amount Reductn the system uses the selected amount as the base amount to calculate the withholding tax amount.
Rounding rules W/Tax comm.round,
Round w/Tax amnt up,
Round w/tax amount To enable the system to calculate withholding tax, you must specify a rounding rule for each withholding tax type.
Post w/tax amount TShe withholding tax amount is both calculated and posted
Accumulation type No accumulation,
Per calendar year,
Per quarter,
Per month,
Per year ,starting with mnth
Acc. W/Tax to max. Is used to accumulated withholding tax
W/tax base manual withholding tax type, the field withholding tax base amount is ready for input
Manal w/tax amnt For document entry the field withholding tax base amount is ready for input for this withholding tax type
No cert. numbering Prevents certificate numbering
Region the region forms part of the address
Base Amount W/tax code level,
Type Level Defines the minimum/maximum withholding tax base amount at withholding tax code level.
Withholding tax amount W/Tax code level,
Type Level Defines the minimum/maximum withholding tax amount at withholding tax type level
2.2.2.6 Define Withholding Tax Type for Payment Posting
You define the withholding tax type for posting at the time of paying. You also have to enter the withholding tax information when entering the document for this withholding tax type. (Only for Thailand)
2.2.2.6.1 Use
The withholding tax type used at the time of posting.
2.2.2.6.2 Prerequisites
N.A
2.2.2.6.3 Procedure
27. Access the activity using the following navigation options:
Transaction Code SPRO
IMG Menu IMG Menu Path :
Financial Accounting  Financial Accounting Global Settings  Withholding Tax Withholding Tax Extended Withholding Taxs  Calculation  Withholding Tax Type  Define Withholding Tax Type for Payment Posting
28. On the Overview screen, make the following entries:
Field Name Description Usage Remarks
Country The country key contains information which the system uses to check entries
Withhld tax type This indicator is used to classify the different types of withholding tax
W/TAX type No. By numbering withholding tax types, you can have withholding tax calculated in a particular sequence
Base amount Net amount,
Modif .net amount.
Gross amount,
Tax amount ,
Modif tax amount ,
Inherit base,
the system uses the selected amount as the base amount to calculate the withholding tax amount.
Rounding rules W/Tax comm.round,
Round w/Tax amnt up,
Round w/tax amount To enable the system to calculate withholding tax, you must specify a rounding rule for each withholding tax type.
Cash discount W/tax pre c/dis,
c/dis pre w/tax
Post w/tax amount TShe withholding tax amount is both calculated and posted
Accumulation type No accumulation,
Per calendar year,
Per quarter,
Per month,
Per year ,starting with month,
Combined Accum
Acc. W/Tax to max. Is used to accumulated withholding tax
W/tax base manual withholding tax type, the field withholding tax base amount is ready for input
Manal w/tax amnt For document entry the field withholding tax base amount is ready for input for this withholding tax type
Self W/holding When you come to make a payment, you can then decide, on a case by case basis, whether self-withholding should apply
W/Tax alrdy w/hd the amount can be entered when you post the invoice
W/tax for Pmnt the withholding tax amount can be entered manually for incoming and outgoing payments
No.Cert. numbering Prevents certificate numbering
Region the region forms part of the address
Base Amount W/tax code level,
Type Level Defines the minimum/maximum withholding tax base amount at withholding tax code level.
Withholding tax amount W/Tax code level,
Type Level Defines the minimum/maximum withholding tax amount at withholding tax type level
Central invoice No centr.invoice,
Cent.inv & 1st p.pmt,
Central inv.prop. indicator, "Central invoicing" is not applied to this withholding tax type. N.A keep it as no.
Minimum check Minimum check at item level,
Check min base amnt at pmnt doc level,
Min .base amnt check at doc invoice level,
Amount min.check at payment doc level,
Tax exempt amount check at Document level You can select any indicator system calculate the tax and post after checking the specified base amount
2.2.2.7 Define Rounding Rule for Withholding Tax Type
You define rounding rules for the individual withholding tax types.
2.2.2.7.1 Use
Rounding rules only apply to the posting of withholding tax amounts in the appropriate company code
2.2.2.7.2 Prerequisites
N.A
2.2.2.7.3 Procedure
29. Access the activity using the following navigation options:
Transaction Code SPRO
IMG Menu IMG Menu Path :
Financial Accounting  Financial Accounting Global Settings  Withholding Tax Withholding Tax Extended Withholding Taxs  Calculation  Withholding Tax Type  Define Rounding Rule for Withholding Tax Type
30. On the Overview screen, make the following entries:
Field Name Description Usage Remarks
Company code NP01 The company code is an organizational unit within financial accounting.
W/th .type I1,P1 This indicator is used to classify the different types of withholding tax.
Currency NPR Currency key for amounts in the system.
Unit 100 Unit to be round off
2.2.2.8 Define Withholding Tax Codes
You define the withholding tax codes rounding for calculating withholding tax.
2.2.2.8.1 Use
Used for calculating the withholding tax.
2.2.2.8.2 Prerequisites
N.A
2.2.2.8.3 Procedure
31. Access the activity using the following navigation options:
Transaction Code SPRO
IMG Menu IMG Menu Path :
Financial Accounting  Financial Accounting Global Settings  Withholding Tax Withholding Tax Extended Withholding Taxs  Calculation  Withholding Tax Codes  Define Withholding Tax Codes
32. On the Overview screen, make the following entries:
Field Name Description Usage Remarks
Country The country key contains information which the system uses to check entries
Withhld tax type This indicator is used to classify the different types of withholding tax
w/tax code One or more "withholding tax codes" are assigned to each withholding tax type
Off.W/Tax Key official withholding tax codes are defined which must be included in official reports
Percentage subject to tax Portion of the invoiced amounts which are subject to tax with the above-mentioned withholding tax code.
Post.Indic If you set this indicator tax amount is deducted accordingly
1 - Portion of the invoiced amounts which are subject to tax with the above-mentioned withholding tax code.
3- Portion of the invoiced amounts which are subject to tax with the above-mentioned withholding tax code.
With/tax rate This is the percentage rate applied to the withholding tax base amount to arrive at the withholding tax amount
With /tax rate ( fraction) Withholding tax rate counter, if the rate can be entered as a fraction
W.tax From Indicator that withholding tax is to be calculated according to a special procedure
Region The region forms part of the address
Prov.tax.code Together with the country key, the region and the withholding tax class,the fiscal province code defines a reporting key that is required for reporting withholding tax (DME) and by the tax authorities (Spain).
Income type Type of income subject to withholding tax
2.2.2.9 Define Formulas for Calculating Withholding Tax
You define formulas (scales) for calculating withholding tax. In order to use a formula for calculating withholding tax, you must enter the national currency in the Currency key field of the relevant company code.
2.2.2.9.1 Use
Used for defining the specification like from which date ,up to what amount the tax rate is applicable
2.2.2.9.2 Prerequisites
N.A
2.2.2.9.3 Procedure
33. Access the activity using the following navigation options:
Transaction Code SPRO
IMG Menu IMG Menu Path :
Financial Accounting  Financial Accounting Global Settings  Withholding Tax Withholding Tax Extended Withholding Taxs  Calculation  Withholding Tax Codes  Define Formulas for Calculating Withholding Tax
34. On the Overview screen, make the following entries:
Field Name Description Usage Remarks
Country The country key contains information which the system uses to check entries
currency Currency key for amounts in the system.
Withhld tax type This indicator is used to classify the different types of withholding tax
w/tax code One or more "withholding tax codes" are assigned to each withholding tax type
Wcty an additional country is needed for calculating or reporting withholding tax
Valid from The date valid from
To base amnt Maximum withholding tax base amount up to which the withholding tax rate specified is to be used
Whld Tax Percentage rate, which is used in conjunction with the withholding tax base amount to calculate the withholding tax amount
Red RT Percentage rate which is to be used for the withholding tax base amount if there is a valid exemption certificate, to calculate the withholding tax amount
Reduce.base amt. Amount by which the base amount is to be reduced in order to determine the withholding tax amount by means of the withholding tax rate
Dec.red.bse.amt Amount by which the base amount is to be reduced with withholding tax exemption in order to determine the withholding tax amount by means of the decreased withholding tax rate
2.2.2.10 Portray Dependencies between Withholding Tax Types
You can represent dependencies between withholding tax categories.
2.2.2.10.1 Use
You can use in a sequence of withholding tax in a sequence.
2.2.2.10.2 Prerequisites
N.A
2.2.2.10.3 Procedure
35. Access the activity using the following navigation options:
Transaction Code SPRO
IMG Menu IMG Menu Path :
Financial Accounting  Financial Accounting Global Settings  Withholding Tax Withholding Tax Extended Withholding Taxs  Calculation  Withholding Tax Base Amount Portray Dependencies Between Withholding Tax Types
36. On the Overview screen, make the following entries:
Field Name Description Usage Remarks
Country The country key contains information which the system uses to check entries
Withhld tax type This indicator is used to classify the different types of withholding tax
W/tax type no. By numbering withholding tax types, you can have withholding tax calculated in a particular sequence
Depend on type no. Sequence number of the withholding tax type whose withholding tax amount has some influence in the calculation of the withholding tax base amount
Table values
Cty Wth.t.type W/tax no. Depen.type Name
NP I1 1 Invoice posting - EWT
NP P1 2 Payment posting - EWT
2.2.2.11 Define Min/Max Amounts for Withholding Tax Codes
you define minimum and maximum amounts for withholding tax codes. In the withholding tax base exemption amount field you can specify an amount which is deducted when calculating the with holding tax base. The amount of the tax exemption does not have any effect when matching the withholding tax base with the minimum, because the base and the minimum are matched before the tax-exempt amount is deducted.
2.2.2.11.1 Use
Used for exemption amount field you can specify an amount which is deducted when calculating the with holding tax base.
2.2.2.11.2 Prerequisites
N.A
2.2.2.11.3 Procedure
37. Access the activity using the following navigation options:
Transaction Code SPRO
IMG Menu IMG Menu Path :
Financial Accounting  Financial Accounting Global Settings  Withholding Tax Withholding Tax Extended Withholding Taxs  Calculation  Minimum and Maximum Amounts Define Min/Max Amounts for Withholding Tax Codes
38. On the Overview screen, make the following entries:
Field Name Description Usage Remarks
Country The country key contains information which the system uses to check entries
Withhld tax type This indicator is used to classify the different types of withholding tax
W/tax Code One or more "withholding tax codes" are assigned to each withholding tax type.
Currency Currency key for amounts in the system.
Valid from The date valid from
Minimum W/tax amount Minimum withholding tax amount. The withholding tax amount calculated if only posted if it exceeds this minimum amount.
Maximum W/tax amount Maximum withholding tax amount. If the withholding tax amount calculated exceeds this maximum, the system posts the maximum amount (and not the actual tax amount
Minimum base amount Minimum withholding tax base amount.
W/Tax bse exem.amount The withholding tax base exemption amount is deducted from the base amount before the withholding tax amount is calculated
2.2.2.12 Assign Withholding Tax Types to Company Codes
You assign withholding tax categories to company codes.
2.2.2.12.1 Use
To work with withholding tax .
2.2.2.12.2 Prerequisites
Company code
Tax code
2.2.2.12.3 Procedure
39. Access the activity using the following navigation options:
Transaction Code SPRO
IMG Menu IMG Menu Path :
Financial Accounting  Financial Accounting Global Settings  Withholding Tax Withholding Tax Extended Withholding Tax s  Company Code Assign Withholding Tax Types to Company Codes
40. On the Overview screen, make the following entries:
Field Name Description Usage Remarks
Company code The company code is an organizational unit within financial accounting.
Withhld tax type This indicator is used to classify the different types of withholding tax.
Recipient type The type of recipient can be defined in the vendor master record
With/tax agent you tell the system that for this withholding tax type, the company code is entitled to withhold tax on behalf of a vendor
W/Tax obligated from Date from which.The company code is obligated to withhold tax for the given withholding tax type
Oblig. to W/Tax Until Date to which. The company code is obligated to withhold tax for the withholding tax type.
W/tax Number This is a number issued by the tax authorities per withholding tax type.
Subject to W/tax you tell the system that the company code for this withholding tax type is subject to withholding tax.
Self Withhldg agent the company code can withhold tax on its own behalf for this withholding tax type
Wxeption number Numbered assigned by the relevant authorities for exemption from withholding tax.
Exemption reas. used to classify different types of exemption from liability to a particular withholding tax.
Exemption rate Rate of exemption from withholding tax.
Exempt from Date from which withholding tax exemption applies.
Exempt to Date up to which withholding tax exemption applies.
2.2.2.13 Activate Extended Withholding Tax
You can activate extended withholding tax.
2.2.2.13.1 Use
To work with extended withholding tax.
2.2.2.13.2 Prerequisites
Company code
2.2.2.13.3 Procedure
41. Access the activity using the following navigation options:
Transaction Code SPRO
IMG Menu IMG Menu Path :
Financial Accounting  Financial Accounting Global Settings  Withholding Tax Withholding Tax Extended Withholding Tax s  Company Code Activate Extended Withholding Tax
42. On the Overview screen, make the following entries:
Field Name Description Usage Remarks
Company code The company code is an organizational unit within financial accounting.
Extended w/tax You select this indicator; you activate extended withholding tax processing.
2.2.2.14 Accounts for Withholding Tax to be Paid Over
You define the accounts for the withholding tax to be paid over.
2.2.2.14.1 Use
Used for posting extended withholding tax.
2.2.2.14.2 Prerequisites
Tax code
GL Account must exist in company code
2.2.2.14.3 Procedure
43. Access the activity using the following navigation options:
Transaction Code OBWW
IMG Menu IMG Menu Path :
Financial Accounting  Financial Accounting Global Settings  Withholding Tax Withholding Tax Extended Withholding Tax s  Accounts for Withholding Tax Accounts for Withholding Tax Define Accounts for Withholding Tax to be Paid Over
44. On the Overview screen, make the following entries:
Field Name Description Usage Remarks
Transaction WIT The transaction keys are used to determine accounts or posting keys for line items which are created automatically by the system.
Withholding tax type Indicates a grouping of valuation areas to facilitate the administration of the table of standard accounts by minimizing the number of entries.
Withholding tax code Key which has a different meaning depending on the procedure. It is used to differentiate account determination.
Account The G/L account number identifies the G/L account in a chart of accounts.
2.2.2.15 Define Accts for W/hold.Tax for "Gross.Up" Offsetting Entry
You can define the accounts for the withholding tax offsetting entry for the "grossing up" procedure .
2.2.2.15.1 Use
Used for posting extended withholding tax.
2.2.2.15.2 Prerequisites
Tax code
GL Account must exist in company code
2.2.2.15.3 Procedure
45. Access the activity using the following navigation options:
Transaction Code OBWU
IMG Menu IMG Menu Path :
Financial Accounting  Financial Accounting Global Settings  Withholding Tax Withholding Tax Extended Withholding Tax s  Accounts for Withholding Tax Accounts for Withholding Tax Define Accts for W/hold.Tax for "Gross.Up" Offsetting Entry
46. On the Overview screen, make the following entries:
Field Name Description Usage Remarks
Transaction GRU The transaction keys are used to determine accounts or posting keys for line items which are created automatically by the system.
Withholding tax type Indicates a grouping of valuation areas to facilitate the administration of the table of standard accounts by minimizing the number of entries.
Withholding tax code Key which has a different meaning depending on the procedure. It is used to differentiate account determination.
Account The G/L account number identifies the G/L account in a chart of accounts.
2.2.2.16 Define Accounts for Self-Withholding Tax
You can define the accounts to which withholding tax is posted.
2.2.2.16.1 Use
Used for posting extended withholding tax.
2.2.2.16.2 Prerequisites
GL Account must exist in company code
2.2.2.16.3 Procedure
47. Access the activity using the following navigation options:
Transaction Code OBWS
IMG Menu IMG Menu Path :
Financial Accounting  Financial Accounting Global Settings  Withholding Tax Withholding Tax Extended Withholding Tax s  Accounts for Withholding Tax Accounts for Withholding Tax Define Accounts for Self-Withholding Tax
48. On the Overview screen, make the following entries: -
Multiple vendor line items during IR with different withholding tax status
Business scenario: During IR, several vendor line items are being processed, some are stock materials, others are service materials (using material group). Only the service materials are subject to withholding tax.
Problem: Since the withholding tax type/code is maintained at the company code level of the vendor master, it is not possible to select only the service materials as subject to withholding tax.
Has anyone encountered this problem before? if yes, please advise solution adopted.
Thanks.I think through condition type / condition record, you can reduce the amount payable to the vendor and post it to another GL account. But if you do not update the amount in the W/tax base and w/tax amount, you will not be able to use standard reports of w/tax. May be condition types can be used to do the calculation of w/tax amount and w/tax base amount. Build the logic in the interfcae of e-invoice and SAP to update W/tax fields in vendor invoice.
-
Wong calculation of Withholding Tax on vendor INvoice
Dear Cheetaz,
In Pakistan rate of withholding tax on freight is 2% and same has been updated in vendor master record. As i am going to make payment to vendor through t ocde F-48 , system is calculating tax @ 1.98% instead of 2%
kindly advice where should i make changes in SPRO so that system claculate tax amount at the rate specified in vendor master recordsHi,
IMG > Financial Accounting > FA Global Settings > Withholding Tax > Extended WT > Calculation >
Withholding Tax Code
Define WT codes
Here WT codes (i.e. rates, etc) are defined for each WT type defined earlier.
F Note: A business transaction can be assigned only one WT code per WT type. If more that
one code (rate) has to be applied, these must be represented by different WT types.
Activity :
WT type WT code
W1 W1 Sec194 - Contractor TDS
% subject to tax 100%
posting indicator 1 i.e. standard posting u2013 bank/customer/vendor line
items reduced
WT rate 2%
Income type SEW1
Define formula for calculating WT
regards,
Sanju -
Sending reduced IDOC from XI to R/3 with nodata markers
Hi !
I need to update a VERY FEW Vendor fields data in R/3 from XI (FILE-XI-IDOC). I'm using the standard IDOC type CREMAS04 (I need to update fields of the E1LFBWM segment...withholding tax fields).
The problem is, that if I disable the not needed IDOC fields in the XI message mapping, when the IDOC reaches R/3, it blanks all the fields that were empty as result of the mapping...I verified it using XI and using the IDOC test tool (we19). For example, if the vendor had data in fields such as "salutation", "phone number", etc. after the IDOC processing, those fields change to BLANK.
One solution is to send the NODATA marker ("/") in those not needed fields, and that works!!!!...<b>BUT</b>, there are hundreds of IDOC fields.
I made a reduced IDOC type, based on CREMAS, enabling only the segments and fields needed, but tnx-WE19 and XI keep sending blank data in the not needed fields instead of the NODATA marker.
How could I send by default, the NODATA marker ("/") to all the fields NOT mapped or disabled, without having to map each field manually ?!?!?
Should XI send those fields as "/", or the R/3 should detect that the incoming IDOC is a reduced IDOC type, and complete all the not existing fields with NODATA ??
The goal is to update some data, and not overwrite with blanks, those fields that should remain untouched.
Thanks !!
Matias.Matias
Is ur intention /equirement to send the NODATA for the rest of the IDOC elements or just send the reduced IDOC for the required sender elements..
if it is only for sender file elements, as sravya said Note 709400 describes
The integration repository provides a new function: "export reduced XSD" to reduce the XML schema of an IDoc.
To use this function in the mapping tool, proceed as follows:
1) Open the relevant IDoc in the object editor of the XI Repository.
2) In the menu "Tools", select the menu option "Export reduced XSD".
3) Assign a file name in the subsequent dialog box and save the data on the hard disk of your local PC.
4) Use this exported file in the message mapping instead of the IDoc by using the function "Import XML or XSD" in the mapping tool to select the source or target message. So you must use this function to import the reduced XML schema stored under
3) of the IDoc in question, and use this XML schema instead of the complete IDoc.
Note: The XML schema generated using the function "export reduced XSD" does not contain the full information in the repository on the IDoc and should only be used for the mapping.
option2: if you want to send the NO DATA, you got to develop UDF in Java or XSLT..
Here is a sample Java code:
obj = inputModuleData.getPrincipalData();
msg = (Message)obj;
XMLPayload xmlpayload = msg.getDocument();
DocumentBuilderFactory factory;
factory =DocumentBuilderFactory.newInstance();
DocumentBuilder builder = factory.newDocumentBuilder();
// parse the XML Payload
Document document = builder.parse((InputStream)
xmlpayload.getInputStream());
var x=document.getElementsByTagName("<rootnode>");
for(i=0;i<x.length;i++)
//the attlist variable will hold a NamedNodeMap
var attlist=x.item(i).attributes;
if (attllist.getvalue.equals("") { //pseudo
attlist.setvalue("/"); //pseudo
document.write(att.value + "<br />");
Good luck
Thanks-Gopal
Message was edited by:
gopal srinivasan -
Withholding taxes at invoice are not totally updated at FMF0
Dear all,
The system consumes the whole amount at budget at the invoice moment but when the payment it is done and updated at funds management by FMF0 that amount is partially consumed.
IF we create an invoice for an amount of 100 u20AC.(it has 10u20AC of withholding taxes) The 100 u20AC goes against a funds reservation doc(linked to an expense commitment item), and withholding tax account (180000) contains a commitment item (retencion) with a
transaction which is not budget relevant (60 and cmmt item category 3).
The figure would be like this
Vendor 90-
Expense 100
Withholding tax 10- [commitment item with transaction 60 ci category 3]
So at funds management the invoice doc(value type 54) consumes 100u20AC (amount type 100)
but when doing the payment
Vendor 90
Bank 90-
and use FMF0 to update payments in funds management the system reduce the invoice document in 90u20AC(amount type 200).
Consequently there is a difference of 10u20AC at invoice document when doing the payment. We would expect to also have 100u20AC of amount type 200. Anyone knows which is the proper procedure so that this 10u20AC gap are not reflected and the 10u20AC are consumed. or what is it what we are missing.
Best regards and thanks for the helpThe problem was that we thought the in order withholding taxes wouldn´t be relevant we have to set financial
transaction to 60.I think now the system works as desired, we have set the commitment
item a value of financial transaction 30, commitment item cat. 3 and it is
flagged as stat. commitment item in order withholding taxes are not
budget relevant. I´m not sure yet if this could have other impacts in our business processes.
Hope not
Best regards and thanks for your help -
Withholding tax and Gross amount determination
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?
When you enter the invoice, the system determines the base amount for withholding tax and stores it in the document (INVOICE ENTRY SIDE). You can also enter the base amount directly. When the invoice is paid, the tax amount is calculated from the base amount and your specifications for the tax code. If the tax amount is to be paid to the tax authorities, the system automatically posts the amount to the tax account. The system reduces the payment amount to the vendor by the withholding tax to be paid (INVOICE PAYMENT SIDE).
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:
Gross amount - The withholding tax base amount equals the line item gross amount.
Tax amount - The withholding tax base amount equals the tax amount of the line item.
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
Marcothanks for all folks
-
Additional Extended Withholding Tax for Chile.
Dear Gurus,
I've received a request for an additional WIthholding tax used in chile for Foreigner which are not living at chile.
The description I've received was as follows.
If a Downpayment is applied the Withholding Tax should be set at the Downpayment.
after that when the Invoice is loaded, the remaining WIthholding tax should be calculated.
I've created two Tax types one for invoice and one for payments. with their corresponding Tax Codes.
Take this as an example: Final Invoice 10000 WTh 20%
F-48 Downpayment of 5000 , estimates WTh of 1000 this leaves
5000 Vendor,
1000 to WTh and
4000 to outgoing payment
After that I enter the invoice reducing the WTh ammount to the remaining part (5000)
that leaves the following accounting doc
Expenses 10000
to Vendor 9000
Wth 1000
then I make a compensation at f-54 for the 5000 Downpayment. but when generating the final payment of the invoice the F110 is calculating as follows.
wht 1000
Vendor 9000
to vendor 5000
Wth 2000
Payment 3000
Doing this it's estimating the nother 1000 of the remaining part of the paymen side of the Wth.
Could anyone let me know if there's a way to make it avoid making this estimation since the whole withholding tax has finished when the invoice arrived.
Thanks in advance for any information you could provide.
RegardsHi Srinivas,
No additional customization required for customers credit Memo TDS except this one. All configuration setting for Vendor withholding Tax procedure also applicable to Customers.
Go to ASSIGN WITHHOLDING TAX TYPES TO COMPANY CODES
then select subject to w/tx check box under customer data
Sunitha. -
Extended Withholding Tax ( Minimum/maximum Base Amount ) - with accumulati
We are facing problem in posting of vendor Invoice. Actually we have implemented Minimum base amount ( Rs. 75000/- ) at withholding tax type level and accumulation at per year in withholding tax type A1 ( for testing purpose ) and assign the same to a vendor. We have booked some invoices up to RS. 75000/- system working fine, no WHT is deducted. But now we have received a another Invoice Rs. 5000/- and at the time of booking of invoice system giving an error message
I have changed the error message to warning but itu2019s again showing the same error message.
Actually the problem is system calculate the WHT from the beginning of the year to till date and the amount of Vendor invoice is less the than the amount of WHT but itu2019s legal requirement and we have to post the financial entry as mentioned below
Fictitious figures
Vendor Account Dr. Rs, 1500.00 ( Debit instead of credit )
Expense Account Dr. Rs. 5000.00 ( Actual exp. Of Invoice )
WHT Payable Account Cr. Rs. 6500.00 ( Total WHT from the beginning
Please provide the any.
SAP reply
Dear Customer,
We understand your requirement. But the standard SAP system does not support a scenario where an invoice amount in lower than the tax amount.
This is not a localization specific requirement. The accumulation logic is a generic system behaviour and all countries use it. We cannot make any change in the standard in this regard and change the current system behaviour.
Option to handle this in the system
The only way this can be handled in the system is once the accumulation limit has been reached, use a separate tax type tax code with out accumulations.
Though this is not the ideal solution, this is the best possible solution for your requirement.
Accumulation is not localized for India and the standard solution vailable for all the countries is used by Indian customers too.
SAP is currently not looking at any enhancements to this feature.
Other than the option mentioned above, there is no other way of handling this in the system.
Best Regards,
Soumya
If any one have any otehr solution please inform us.This cannot be possible for two reasons.
1. If you are not able to recover the amount from the Vendor, you'll have to bear it yourself which is a loss to the company.
2. Even if such a process is provided, you cannot alter the previous invoices and your EWT amount does not correspond to the invoice you account for. SAP works in an assumption that Tax will be calculated as a % of base price and cannot exceed it.
The only way to mitigate this is to decide whether a Vendor would require this exemption to be declared based on past experience and past amount of transactions in the beginning itself. If it is unlikely, better do not declare the accumulation limit for them. This will save you from incurring loss and reducing the risk for the company. Start deducting right from the beginning.
If you are not sure, instead of giving accumulation, you can declare exemption upto 75000. In this case, SAP cannot check whether the Vendor has crossed the limit or not. You'll have to manually check and pass a Debit note to that extent when he exceeds the limit. Again, this does not evade the risk of loss for the company. Also, you cannot do TDS post processing for this amount (like TDS Remittance challan, TDS Certificate etc).
So, in my opinion, try and decide if the Vendor would require accumulation right in the beginning itself. Even if not able to decide, you can still deduct the tax and issue a TDS certificate, which the Vendor can claim refund based on his transactions with you from the Income Tax in case he does not exceed the limit. This will limit the risk of loss for the company.
Ravi. -
Extended Withholding Tax - Minimum Amount
Dear SAP Expert,
In our setup we have extended withholding tax incoming payment for outgoing invoices.
The scenario is if invoice base amount is less than 300 EGP (local curreny) then withholding tax information should not capture invoice document.
I setup minimum based amount on withholding tax type and withholding tax codes level but still when user post outgoing invoices WHT information is captured in FI document.
Because of above issue automatic clearing (F.13) is not happening and we are getting error message like "Items with withholding tax code for customer subject to withholding tax"
looking for expert assistance.
B/R
Prashant RaneDear Mani,
Thanks for assistance.
from your example I understand if invoice amount is less than 10,000 then WHT should be applicable.
In my example min invoice amount is 300 EGP
where 2 % WHT is applicable
I wanted to know in which below field I should enter 300 EGP (from your example 10,000)?
Calculation > Withholding Tax Codes > Define Formula for calculating Withholding Tax:
Currency u2013 EGP
W/Tax Type u2013 I2
W/Tax Code u2013 P2
Valid from u2013 01.01.2009
To base amount - 999,999,999,999
W/Tax Rate u2013 2%
Reduced Withholding Tax Rate for Exemption u2013 BLANK
Reduction of Base Amount u2013 BLANK
Decreased Reduction of Base Amount - BLANK
Below is complete customizing I did in my setup
Financial Accounting
Financial Accounting Global Settings
Withholding Tax
Extended Withholding Tax
Calculation > Withholding Tax Type > Define Withholding Tax Type for payment posting:
Withhld tax type u2013 I2
Base Amount u2013 Net Amount
Accumulation Type u2013 No accumulation
Control Data u2013 W/Tax base manual, manual W/tax amnt, w/tax for payments, no cert. numbering
Base amount u2013 W/tax code level
W/tax amount - W/tax code level
Minimum check u2013 Min. base amnt check at doc invoice level
Post W/Tax Amount - YES
Calculation > Withholding Tax Codes > Define Withholding Tax Code:
Withhld tax type u2013 I2
W/tax code - P2
Base Amount u2013 Pecentage subject to tax 100%
Postings Indic- 1
Calculation u2013 W/tax rate u2013 2%
Calculation > Withholding Tax Codes > Define Formula for calculating Withholding Tax:
Currency u2013 EGP
W/Tax Type u2013 I2
W/Tax Code u2013 P2
Valid from u2013 01.01.2009
To base amount - 999,999,999,999
W/Tax Rate u2013 2%
Reduced Withholding Tax Rate for Exemption u2013 BLANK
Reduction of Base Amount u2013 BLANK
Decreased Reduction of Base Amount - BLANK
Calculation > Withholding Tax Codes > Minimum and Maximum Amounts
Min / Max Amounts for W/Tax Type
W/Tax Type u2013 I2
Currency u2013 EGP
Valid from u2013 01.01.2009
Min W/Tax Amount u2013 60
Max W/Tax Amount - 999,999,999,999.00
Min base amount u2013 300
Min / Max Amounts for W/Tax Code
W/Tax Type u2013 I2
W/Tax Code u2013 P2
Currency u2013 EGP
Valid from u2013 01.01.2009
Min W/Tax Amount u2013 60
Max W/Tax Amount - 999,999,999,999.00
Min base amount u2013 300
W/tax base exem amount u2013 BLANK
Company Code > Assign WHT Tax Type To Company Code:
Company Code u2013 0011
W/Tax Type u2013 I2
Customer Data u2013 Subject to W/Tax -
Extended Withholding Tax & MIRO - total balance
I have the following situation:
Extended withholding tax is active in company code and the withholding tax type is defined for invoice posting. Everything seems to work correctly except for the following detail: if the invoice has additional charges which are only subject to normal tax rate (VAT) or no tax; then during incoming invoice with MIRO the system cannot balance the accounts; always the difference is the w/t amount even though I have typed the base amount in the corresponding tab. For example, if I receive an invoice for services (no GR) with the following items (the W/T rate is 4% and VAT 16%):
Amount subject to W/T and VAT: 4,600
Other charges (no tax): 194
VAT amount: 736
W/T amount (calculated): 184
Net invoice amount: 5,346
If I type 5346 in the amount field and 4600 in the base amount for w/t then the balance is not correct (difference of 184), unless I type 5530 in the amount field (the others values are calculated correctly).
Am I doing something wrong or missing configuration?
Thanks in advance
JALHi,
The amount payable to vendor is 5346 (ie Gross bill of 5530 (less) withholding tax 184). In the header data, let the amount be maintained as 5530. In the withholding tax tab, change the withholding tax base amount to 4600 and the withholding tax amount as 184. This withholding tax amount gets reduced from the vendor bill of 5530.
On simulation, you can see the screen as per your requirement.
Regards
Hari -
Different fiscal year for extended withholding tax
Hi All SAP Gurus,
I have configured the extended withholding tax as per the Indian requirement.But I am unable to meet the following to requirement as per client's need.Can anybody help me out please?
1) My client is following Calander year ( Jan to Dec.) for Global ledger and it is assinged to Company code Global setting.For Local reporting in India, we are using Non-leading ledger L1 and fiscal year V3 ( April to march) is assignd to it.Now the problem comes when we perform the TDS process.
a) We assigned the number range etc. for Internal challan number and TDS certificate.When we run J1INCHLN and J1INCERT, system is picking the number as per the calalnder year and not as per the April to march fiscal yearThis creates problem for the priod of next year (say jan to march 2010).Can anybody worked on such a senario. Please help me out.
b) Second requirement is client wants lower rate deduction of TDS. I really don,t know much but I wonder that how we can set lower rate deducation in SAP as it is linked to the total Invoice amount and from and to period. I could not find anything in the vendor master where we can assign period as well as total turnover amount for lower dedcution.
Please helpme out.
Thnaks in advance.Hi, Ekta
For lower deduction of Tax you will have to do the following Config:
1.In SPRO Extended WTD --> Basic Settings --> Define Reasons for Exemption:
Reason for exemption
Indicator used to classify different types of exemption from liability
to a particular withholding tax.
Enter Text field such as Concessional Rate of Vendor Name
2.Extended WTD --> Calculation --> India --> Settings for Annual Returns --> Assign Exemption Reasons to Withholding Tax Codes:
Mantain Country, WTH Tax Type, WTH Tax, Exemption reason creatd above.
3. In the vendor Master enter the following details:
Exemtion Number - Certificate no. recd.from Income Tax dept.specifying reduced rate of TDS
Exemption % : 25
Exemption Reason: One created by you.
Exemption From Date:
Exe,ption To Date:
This should resolve part of your issue.
Thank You. -
Withholding tax calculation with formula base problem
Dear all,
I maintained some formula depend on client requirement. for example:
up to 200,000.00 no withholding tax
2 lax to500,000.00 <1.00 %> tax
5 lax to 1,500,000.00 <2.50%> tax 1.00 % Reduce on 500,000.00 base amount
15 lax to 2,500,000.00 < 3.50 % > tax 2.50 % Reduce on 1,500,000.00 base amount
25 lax to 3,000,000.00 < 4.00 % > tax 3.50 % Reduce on 2,500,000.00 base amount
30 lax to 99,999,999,999.00 <5.00 %> tax 4.00 % Reduce on 3,000,000.00 base amount
Like this i maintained slabs in formulas for calculating withholding tax. depend on this formula up to 2 lax their is no tax. after crossing 2 lax up to 5 lax 1% tax
in this case tax will calculate based on total vendor invoices. But hear it is calculated on present invoice based only. for example i posted 2 invoices with amount 2 lax. it means i reached 1st slab up to 2 lax no Tax. system also calculated like that only. but when i try to post another invoice with amount 3 lax system is calculated 1% tax on 3 lax amount only. but already i posted 2 lax invoice in vendor account. system not considered this amount.
*but actually in this case i want to calculate 3+2= 5 lax * 1% tax . but hear my system is not consider previous invoices .*
Please do need full help.....
Regards,
Krishna Valeti
Edited by: chaituvaleti on Sep 9, 2011 8:51 AM
Edited by: chaituvaleti on Sep 9, 2011 8:54 AM
Edited by: chaituvaleti on Sep 9, 2011 9:02 AMCan you please share the information to us, it will be a great information to us , thanks in advance.........
-
Request for info. on withholding tax
Hi,
what configuration steps i have to follow to configure withholding tax(i.e classic) not extended withholding tax.
I know how to configure extended withholding tax but facing difficult to configure withholding tax.
In the IMG we will be using two tabs one is withholding tax and one is extended withholding tax.Please provide info on withholding tax not extended withholding tax
Please provide steps
Thanks in advance
HAGI<b>Configuration for Witholding Tax</b>
SPRO>IMG>Financial Accounting>Accuntas Receivable and Accounts Payable>Business Transaction>Incoming invoices/credit meos>Carry out and check settings for withholding taxes.
1) <b>Maintain tax codes</b>: In OBC7 maintain the withholding tax codes and their attributes like percentages and basis like gross or net etc.
2) <b>Maintain the account determination</b> for each and every tax codes through OBYS.
Other optionals:
Withholding tax is only relevant for specific posting transactions in certain countries and even there, only for some groups of vendors. You therefore determine, depending on your company code, business partner, and the business transaction, the cases in which the fields for withholding tax become ready for input .
1) Maintain the country keys (The standard system delivers most of the countries forms to be submitted to the tax authorities)
2) Maintain Formulas OB98 (if needed, Like US and Japan need scaled basis calculation.)
3) The recipient categories
<b>Master Data andTransactions</b>
You need to specify in the vendor master record, a withholding tax code to enable the system to calculate the tax amount, which defaults when you enter a line item if the vendor is subject to withholding tax.
If a vendor is exempt from withholding tax, you must specify this in the master record the details of exemption certificate and the date up to which the exemption is valid. If an exemption exists, the system either posts no withholding tax or the reduced tax rate.
Withholding tax is only relevant for specific posting transactions in certain countries and even there, only for some groups of vendors. You therefore determine, depending on your company code, business partner, and the business transaction, the cases in which the fields for withholding tax become ready for input .
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