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withholding tax scenario

Former Member
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We have the following Withholding tax scenario:

In the vendor master data I have Withholding tax type PR and Withholding tax code 01 (tax rate 7%). Minimum amount is 1500.

Now, suppose 1600 USD has been invoiced and paid for this vendor; tax withheld is 7% of (1600-1500=100) equals USD 7.

Now, suppose, this vendor gets an exemption certificate from the regulatory authority allowing their tax to be withheld at a lower rate, say 3%.

So, we change the vendor master data so it now has Withholding tax type PR and Withholding tax code 02 (tax rate 3%). Minimum amount is 1500.

 

Now, when we post an invoice for this vendor, it starts calculating again (from zero) for withholding tax towards minimum amount 1500; because the withholding tax code was changed. It does not start to withhold till the minimum amount after the change has exceeded 1500.

 

Our requirement is that it should not start minimum amount calculation again after the change and continue to withhold (at the new rate) since that vendor

has already exceeded the minimum for the year.

Please let me know.

Thanks

Mani

Accepted Solutions (0)

Answers (2)

Answers (2)

jainbh
Explorer
0 Kudos

Hi Mani

You need to execute report RFWT0010 after you change master data.

In selection screen specify the vendor code & company code & if possible, specify document numbers.

Regards

Bhavesh

Former Member
0 Kudos

Hello Bhavesh,

My understanding is that RFWT010 is used in a scenario where we have different withholding tax type on the invoice posting date and payment posting date;and it does not apply to this scenario.

Hello Mauri,

I define the minimum amount under:

Financial Accounting Global Settings (New)

Withholding Tax

Withholding Tax

Report

Define Minimum Amounts for 1099 Report

--

Thanks

former_member207607
Active Contributor
0 Kudos

Dear Mani,

Minimum amount is 1500 --> where do u define it? are u using accumulation?

please provide more details.

thanks.

Mauri