Withholding tax types

In one business transaction, several kinds of withholding tax may have to be withheld. The SAP System uses withholding tax types to reflect this. Several withholding tax types can be defined in the system; one or more can be assigned in the vendor master record.

The withholding tax type governs the way in which extended withholding tax is calculated and is defined at country level. As far as the time of posting for withholding tax amounts is concerned, there are two different categories of withholding tax types:

• Withholding tax type for posting at time of invoice

• Withholding tax type for posting at time of payment

Withholding Tax Type for Posting at Time of InvoiceMake the following entries:

• General data

Define the name of the withholding tax type.

• Calculation

Define the details for calculating the withholding tax base amounts and the rounding rules for the withholding tax amount.
You also determine whether the withholding tax amount is to be both calculated and posted or only calculated (the latter is the case in France, for example).

• Base amount

Field	Meaning
Net amount	The withholding tax base amount is the line item net amount.
Modified net amount	The withholding tax base amount is equal to line item net amount plus a number of specific tax amounts. The processing keys for the tax amounts to be totaled have to be specified for this withholding tax type in a separate activity in Customizing.For more information, see the Implementation Guide (IMG) for Financial Accounting under Financial Accounting Global Settings ® Withholding Tax ® Extended Withholding Tax ® Calculation ® Withholding Tax Base Amount ® Define Transaction Key for Modified Net Amount.
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.
Modified tax amount	The withholding tax base amount is equal to the total of certain specific tax amounts. The processing keys for the tax amounts to be totaled have to be specified for this withholding tax type in a separate activity in Customizing.For more information, see the Implementation Guide (IMG) for Financial Accounting under Financial Accounting Global Settings ® Withholding Tax ® Extended Withholding Tax ® Calculation ® Withholding Tax Base Amount ® Define Transaction Key for Modified Net Amount.

Withholding Tax Type for Posting at Time of Payment

The settings for withholding tax posting at time of payment are generally the same as for posting at the time of invoice entry with the exception of the following:

• Calculation

In addition to defining the details for calculating the base amount and the rounding rules, you also define how cash discount is treated in connection with withholding tax. You determine whether the withholding tax amount is to be calculated before or after subtraction of cash discount.

• Accumulation type

Here you can also select combined accumulation if amounts are to be accumulated over several vendors or customers.

• Control data

Additional fields:

• Self-withholding

This means that self-withholding is permitted for this withholding tax type (that is, vendors subject to tax can pay over the tax themselves).

• Withholding tax withheld

Here you enter a withholding tax amount that has already been withheld (for example, by a subcompany); this amount is then deducted from the calculated withholding tax amount on payment (only possible with No accumulation and Central invoice proportion.).

• W/tax acc. to payment

Here you can enter the withholding tax amount manually for incoming and outgoing payments for this withholding tax type.

• Central invoice

The central invoice function is a special procedure for calculating withholding tax that is used in Argentina. Invoices and debit/credit memos that are linked via the field Invoice reference are processed separately.
Here you can make the following settings:

• No central invoice

The central invoice entry method is not used for this withholding tax type.

• Central invoice and first partial payment

If you use this withholding tax type, the whole withholding tax amount is posted when the first partial payment is made for the open item. This function is used to calculate the withholding tax based on tax on sales/purchases (Sales Tax Withholding) in Argentina.
The withholding tax base amount is compared to the minimum amount using the total amount of the withholding tax base amounts of the open item together with the related documents, whether or not these were previously selected.

• Proportional distribution of withholding tax (Centr. Invoice prop.)

The withholding tax amount is distributed across all partial payments in proportion to the payment amount in the open items. In Argentina, this function is used to calculate withholding tax on income tax and social insurance tax.

• Minimum check

Here you define at what level - invoice or payment - minimum checks are carried out. The specification is valid either for the minimum base amount check or the minimum amount check.

• If you select Minimum check at item level, the minimum amount check and withholding tax amount check is carried out for each item to be cleared.

• If you select Minimum base amount check at payment document level, the system uses the full withholding tax base amount for all items as the basis for the payment proposal for the relevant payment. The minimum base amount is then checked against this total withholding tax base amount. This function is used in Argentina to calculate withholding tax on income tax.

• If you select Minimum base amount check at invoice document level, when you pay a given invoice item, the system calculates the amount for the minimum base amount check using the total of all items in the invoice. The minimum base amount is then checked against this total withholding tax base amount.

• If you select Minimum amount check at payment document level, the system uses the full withholding tax amount for all items as the basis for the payment proposal for the relevant payment. The minimum amount is then checked against this total withholding tax amount.

Lets see Maximum/minimum amount for withholding tax