SAP Knowledge Base Article - Public

1817674 - Withholding Tax not Calculated Automatically

Symptom

  • You execute a Withholding Tax Return Run and it finishes with the result No tax item exists for period XX.XX.XXXX to YY.YY.XXXX (XX.XX.XXXX and YY.YY.XXXX represents the selected time period). 
  • You have maintained all required data and expect the system to calculate the withholding tax and report it accordingly.
  • or you have just created a supplier invoice and notice that no withholding tax is calculated in the Withholding tax tab. 
  • or After you enter the tax code or though tax code appears under the withholding tax tab of supplier invoice, there  are no tax details appearing below it

Environment

SAP Business ByDesign

Reproducing the Issue

  1. In the Supplier Master data (in the Financial Data tab > Tax Data sub-tab) a country code, a withholding tax type and a withholding tax rate type are maintained. 
  2. In the Supplier Invoicing work center navigate to the Invoicing and Credit Memos view.
  3. Open one of the invoices for which you expect automatic withholding tax calculation.
  4. Press View all and navigate to the Items tab. There navigate to the Taxes sub-tab.
  5. Now go to the Withholding Tax Details sub-tab.

You notice that there is no withholding tax entry visible/ tab itself not available.

Cause

In general, to have the withholding tax calculated automatically for a supplier invoice, the following pre-conditions need to be met:

       1. Tax Authority/ Company Tax Arrangement:    

      Withholding Tax Indicator

  •  If the indicator is selected, the company will withhold taxes whereever applicable.

       2. Supplier -  Withholding Tax Classification: 

  • Country /Region:  If no country is provided, the supplier is not subject to withholding tax.
  • Tax Type and Tax Rate Type: A tax rate type code can be assigned for a particular country and tax type. In most cases, there is only one tax rate type code available because withholding tax rates do not depend on the supplier.
  • Tax Rate Type Code - In some countries, there are withholding taxes where the rate is influenced by the supplier; in this case, there are multiple tax rate type codes available.

The above pre-conditions are mandatory.

There is a third, optional precondition:

       3. Product -  Withholding Tax Classification: 

A product is only subject to withholding tax if the below details are provided: 

  • Country Code
  • Tax Type Code
  • Withholding Tax Income Type Code

Note: If you maintain a supplier invoice item without product ID or with a product for which no withholding tax details are maintained, you need to maintain one more detail in the Supplier master data. Here, a Withholding Tax Income Type must be maintained to have the withholding tax calculated automatically.

Resolution

You can select Withholding Tax Required check box from the below steps:

  1. Go to the Tax Management work center.
  2. Go to the Tax Authority view.
  3. Go to view the Tax Company Tax Arrangements.(ensure you have entry available for  the company and country for which you have created the supplier invoice)
  4. Select the Company (the Company ID used in the Supplier invoice) for the Tax Country of your Invoice.
  5. Select the Tax Authority ID based on the Tax Return Type Withholding Tax Returns - File xx with Tax Number Type.
  6. Click on the Edit button and go to the Company Tax Arrangements tab.
  7. Select your Company and tick on the Withholding Tax Required check box.
  8. Click on Save button. 

 To make changes in the Supplier master data  follow below steps:

  1. In the Supplier Base work center navigate to the Suppliers view.
  2. Select a supplier that is subject to withholding tax.
  3. Navigate to the Financial Data tab and there to the Tax Data tab.
  4. Make sure that under Withholding Tax Classifications you maintain a country code, a withholding Tax Type and a Withholding Tax Rate Type.
  5. Now in the Details section maintain a Withholding Tax Income Type.
  6. Press Save and Close.
  7. Proceed with these steps for all suppliers that are subject to withholding tax.

To make changes in the material master data follow below steps:

  1. In Product Portfolio work center select a material/service that is subject to withholding tax.
  2. Navigate to the Taxes tab. 
  3. Make sure that under Withholding Tax Classifications you maintain a country code, a Tax Type and a Withholding Tax Income Type.

If you now create a new supplier invoice for these suppliers, the withholding tax will be calculated and you will find an entry in the Withholding Tax Details tab as described above.

The withholding tax will not be calculated for previously created supplier invoices. For these entries you need to manually create Withholding tax item entries:

  1. In the Tax Management Workcenter navigate to the Manual Tax Entries view and here to the Withholding Tax Base Amount Entries view.
  2. Press New - Tax Entry and maintain all the relevant data.

Keywords

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Product

SAP Business ByDesign all versions