FB60 Vendor posting for witholding tax

[nicolelim28]

Hi All.

I have query on when in FB60 Vendor posting for witholding tax.

The amout is 10k, 8% of withholding tax at 800.

My current SAP settings is

Credit Vendor account 9200
Debit COGS account 10k
Credit Tax payable GL 800

Now user expectation is

Expecting entry -

Cr Vendor 10k
Cr Tax payable 800
DR GR/IR 10k
DR Vendor 800

Can please advise on the system setting/configuration?

Thanks

[Jeremy_Deo]

Hello dear user,

And thank you for asking your question in the SAP community blog.

What’s happening right now in your FB60 postings is a net withholding tax setup, where the vendor gets credited with the invoice amount minus withholding tax. So for a 10,000 invoice with 8% WHT, the system posts:

• Dr Expense: 10,000
• Cr Vendor: 9,200
• Cr WHT Payable: 800

However, the users are expecting a gross-up posting, which looks like this:

• Cr Vendor: 10,000
• Cr WHT Payable: 800
• Dr Expense (or GR/IR): 10,000
• Dr Vendor (Receivable): 800

This reflects the full liability to the vendor (10k), while separately recording that we’ll be deducting 800 for withholding — essentially treating it as a receivable from the vendor.

To get this behavior, the withholding tax setup needs to be adjusted:

1. Withholding Tax Type
Go to SPRO and edit the WHT type used for invoices. There’s a setting called "Gross amount" — this needs to be enabled. It tells the system to add the WHT on top of the amount, rather than deducting it.

2. Withholding Tax Code
Make sure the tax code (e.g. 8%) is assigned to that WHT type, and that it's configured to post during invoice entry.

3. GL Account Assignments
You’ll also need to maintain the correct GL accounts for:

• The WHT Payable
• The gross-up receivable (the debit to vendor for the WHT amount)

4. Posting Keys
Finally, make sure the accounts involved are open for the posting keys SAP uses in this scenario (e.g. 31, 21, 40, 50).

Let me know if you want help walking through the config paths or checking the account assignments.

Best regards,

Jeremy