Hi all,
Hope all is well.
First of all, i would like to apologize if my terminology is bad, but i am an IT person not exactly "FIN/TAX" expert.
We are in middle of UAT testing and we are encountering pretty bad issue with the "Withholding tax calculation" on prepayments.
I will try to describe it below with print screens, but long story short.
Purchase order > Prepayment > Invoice > Vendor Payment Journal and Settling the transaction.
The expected behavior:
Net amount 1 000 000
Sales tax 7.5 %
Withholding tax 5 %
The withholding tax will be based only on the Net amount of 1 000 000 and not on the net + tax.
Here is what i have as setup and investigation from my side and i hope someone can give me a clue whats wrong here.
Purchase order
Net amount: 1,000,000.00
Sales tax setup on the PO
The sales tax code:P_VAT7.5NR details below.
Note that in values this is marked as 100% deductible.
For this case i am using the below withholding sales tax code.
Based on my understanding the "Percentage of net amount" should drive the calculation to be based on the net amount.
Here are my totals on the PO.
No withholding tax because this is being calculated at the time of payment settlement based on what i have gathered online.
So far so good.
Prepayment details.
Invoice tax parameters.
My tax is correctly calculated and still no withholding tax details as i would expect at this point.
Here the issue appears.
When i am doing the vendor payment journal and settling the transaction.
This is not what i would expect from the existing setup.
Instead the base should be 1 000 000 and the withholding tax 50 000.
Things i checked, but didn't help.
On the vendor record the toggle for "calculate withholding tax is on"
On the Journal the "Price include sales tax was on i switched it, but no difference.
I assume this is somehow related to the tax engine and probably we should move to globalization studio, but i was hoping that someone has any idea about this.
Thanks a mil in advance !
Simeon.
