Withholding Tax account is automatically generated while
posting by system. It’s mean that you have to define account for withholding
tax to let system know which account should be pick up for posting. In SAP,
there are 4 types of withholding tax can be set.
1. Define Accounts for Withholding Tax to be Paid Over
2. Define Accts for W/hold.Tax for "Gross.Up"
Offsetting Entry
3. Define Accounts for Self-Withholding Tax
4. Define Accounts for Withholding Tax Offsetting Entry
What I gonna explain today is a basic setting which is “Define
Accounts for Withholding Tax to be Paid Over”. This function is used to define
account for common withholding tax. Basically, account for withholding tax can
be defined at level of withholding tax type. It’s mean that different type can
post to different account.
When withholding tax account is posted?
Assume that you post vendor invoice which has 3% of withholding
tax at payment. System will record accounting journal as below:
Dr. Expense
Dr. Input Vat (optional)
Cr. Vendor à
this is an open item (withholding tax based is entered here)
On due date of this invoice, you post an outgoing payment by
choosing vendor open-item from document above. Below is accounting journal of
payment document.
Dr. Vendor
Cr. Bank
Cr. Withholding Tax Account (This account is automatically
generate by system.)
The configuration that I gonna explain next is how to define
withholding tax account that automatically generate while posting by system. It’s
very easy and simple. There are only 3 steps to define account for withholding
tax
How to define account for withholding tax in SAP
Menu Path: SPRO -> Financial Accounting (New) -> Financial Accounting Global Settings (New) -> Withholding Tax -> Extended Withholding Tax -> Posting -> Accounts for Withholding Tax -> Define Accounts for Withholding Tax to be Paid Over
T-Code: OBWW
1. Enter Chart of Account
2. Enter Withholding Tax Type and Account
3. Press <Save Button>
Label: Define account for withholding tax in sap,
withholding tax account configuration in sap, how to define withholding tax
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