Withholding Tax in Sales, Rebate Settlement

In Many countries Withholding tax is liable on some or all sales activities. Some of these countries have legal requirement to show Withholding Tax in Sales output. Such requirement makes it compulsory to catch withholding tax in sales transaction and print on Invoice output.

Withholding tax is a government requirement for the payer of an item of income to withhold or deduct tax from the payment, and pay that tax to the government.

For example, In Thailand it is legal requirement to capture withholding tax for Standard Credit Memo if use in sales promotions. Thailand also requires to capture Withholding Tax in Rebate settlement.

In Indonesia it is legal requirement to capture withholding tax in Rebate credit settlement.

This document mainly focus on challenges faced  in my busines  scenario  to implement  Withholding Tax and solution used.

Hope this document will be helpful for community. If find useful then please dont forget to like and give your valuable rating for this knowledge share.

Possible standard scenario to catch  Withholding Tax  :

1.   1.  WHT during Payment (FI Method):

WHT tax line determined in sales document and FI captures WHT at the time of Payment posting.

In this case  WHT calculated amount will not show in Invoice Pricing  or at the time of Invoice account determination.

‘WHT’ amount will be calculated at the time of Payment posting in FI.

1.   2.  WHT during Invoice Posting (SD Method):

WHT tax determined in sales document and posted during Invoice account determination.

In this case WHT amount will not show up in Invoice Pricing condition.

While Invoice posting WHT amount calculated  as per record maintained by Finance at Customer master and Tax Code level and posted. 

WHT calculated amount will show in Invoice account determination.

In this document I will discuss Scenario 2 (SD method).

WHT during Invoice Posting (SD Method):

SAP treats Withholding tax differently than Standard tax and this makes many normal SAP scenario not working in case of Withholding tax.

Some of challanges  faced  and recommendations listed below.

Challenges & Recommendation:

• Price Fields like Material Tax Classification, Customer tax classification are not allowed to use in case of Withholding Tax. SAP do not support these price fields in case of Withholding tax.
• Price Type which works smoothly in case of Standard tax like MWST do not consider Withholding Tax as Tax condition. For Example Pricing Type ‘G’ do not consider withholding Tax as tax and not redetermine it in invoice. This creates issues of redetermination of Withholding Tax in Invoice. That’s why I recommend to not use such fields in Withholding Tax conditions which requires redetermination for Example Invoice Type.
• In sales Withholding Tax condition behave different than normal price or Tax condition. SAP do not show value carried by Withholding Tax in sales document. So in case if it is require to show withholding tax condition in sales price tab then dummy conditions may be use to copy withholding tax condition to display value in sales document.
• SAP do not consider value which is maintained in withholding tax condition record (Tcode VK11) in Invoice posting.
• SAP post value based on condition record maintained at FI taxcode level. If withholding Tax condition in sales order determines and matches  withholding  Tax type as maintained at Customer Master FD01 then SAP post value as maintained at FI relevant Tax code level
• Normal Rebate Pricing procedure do not treat Withholding Tax same as Standard tax. You will find various issue if trying to use same pricing procedure which worked well with Standard Tax.
• SAP strongly recommend separate withholding tax conditions in pricing procedure for each Tax Type. It means if business require more than 1 withholding tax type than this will require same number of Withholding tax conditions.
• This will also impact in Rollout where Global template in pricing procedure is being use. This will require changes in Global pricing procedure template for example Indonesia and Thailand will require 2 withholding tax conditions one for each country in procedure.

Configuration:

Withholding Condition Type setting V/06:

Access Sequence: SAP recommend Country and ‘J_1ATXREL’ (Tax Rel Classification) field in Access. J_1ATXREL is FI field of Tax code  To fetch FI Tax Code in SD pricing, it is require to create new requirement. This requirement needs to be assign at Access level. Check SAP Note : 178824 for further details.

Pricing Procedure: Assign this new condition in Pricing procedure as a statistical condition.

FI Settings (T Code SPRO):

Create New Withholding Tax Type

Assign Withholding Condition Type to Tax Type:

Create Tax keys : Thsetting is is require to maintain Tax classification field in condition record maintenance

Tax Type and tax code activation at Customer Master Company Code Level (FD03)

Maintain Condition record in VK11:

Withholding Tax in sales Order:

Note there is no value populating in Withholding tax sales order.

You may use Condition Exclusion to disable Standard tax.

Capturing Withholding Tax in Rebate:

To capture Witholding Tax in rebate settlement it is require to make pricining procedure as special by activating tick in customization. SAP do not treat Witholding Tax same as standard tax. So in normel scenario witholding tax will not work same like Standard Tax. This creates issue when implementing Global template. You need to create seperate pricing procedure for such countries and mark it special in configuration.

Printing Withholding Tax in Output:

There are 2 options to fetch withholding Tax value in output:

1. Addition of dummy condition in pricing procedure to copy withholding tax value and then printing it. This may create issue if in case by mistake Condition record at VK11 and FI Tax code level are not same.

2. Using FI table. I used this method to fetch withholding tax from FI table to Invoice output. If your business support, you may try Table ‘WITH_ITEM’ or “BSEG’ to fetch Withholding tax value and print it in output.

Hope this document will be helpful for community. If find useful then please dont forget to like and give your valuable rating for this knowledge share.

Regards

Neeraj

Further Helpful Reading:

SAP Note: 178824

SAP Note: 66152 – Rebate credit memo: additional condition types

URL:

https://help.sap.com/saphelp_globext607_10/helpdata/en/d1/634ebcee4811d5b720006094b9ec21/content.htm?frameset=/en/03/4c7e74ff8e11d5b724006094b9ec21/frameset.htm&current_toc=/en/3f/26893ac81aa374e10000000a11402f/plain.htm&node_id=93

http://help.sap.com/erp_hcm_ias_2012_03/helpdata/en/75/dd0538efcddf3ae10000009b38f8cf/frameset.htm