KRISHNAMOHAN JOSHI

FUSION TAX

Setting up Withholding Tax

The following is the Enterprise Structure which would be considered

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Create a Tax Authority Supplier with a Valid Supplier Site

Ensure that “Use Withholding Tax” option is enabled at Income Tax region of the supplier
profile

Save

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Save and Close

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Setting up Rate Schedule Based on a Document with a Tax Rate Type of Gross Amount

Manage Regimes

Save and Close

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Manage Taxes

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Save and Close

Manage Tax Statuses

Save and Close

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Manage Tax Rates and Tax Recovery Rates

Save and Close

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Manage Tax Jurisdictions

Save and Close

Manage Tax Formula

Save and Close

Associate the Tax Formula created to the withholding tax under the Tax Rule Defaults>
Taxable Basis Formula.

Enable the tax for Transactions, Save and Close.

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Manage Tax Rules

Create a Withholding Taxable Basis Rule

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Submit

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Manage Configuration Owner Tax Options

Ensure to set the Regime Determination Set =Determine applicable Withholding regimes

Save and Close

Create and Invoice

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The above example illustrates how withholding tax is calculated for Rate Schedule
Based on a Document with a Tax Rate Type of Gross Amount

The withholding tax on an invoice for 6000 is calculated as:

(1000 * 5%) + (4000 * 10%) + (1000 * 15%) = 600.

If we define the apply single rate, the withholding tax is calculated as: 6000 * 15% = 900
because 6000 falls in the 15% range of over 5000.

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Setting up Rate Schedule Based on Period with a Tax Rate Type of Withheld Amount

Manage Withholding Calendars

Save and Close

For the withholding tax=AWT_TAX ensure to set the following

Save and Close

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Manage Tax Rates and Tax Recovery Rates

Create a new tax rate type of Withheld Amount

Save and Close

Since we are using the same tax ensure that above tax rate is set as default

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We are using the same tax formula, taxable basis and tax rule (taxable basis rule)

Create an invoice which should satisfy the taxable basis rule

The withholding tax is calculated based on:

 0 to 50 at 5% is equal to a gross amount of 0 to 1000. For example, a withheld

amount of 50 at 5% is equal to 1000 * 5%.
 50 to 500 at 10% is equal to a gross amount of 1000 to 5000. For example, a
withheld amount of 500 at 10% is equal to 5000 * 10%.

The first invoice in a period for the amount of 4000 is calculated as:

(1000 * 5%) + (3000 * 10%) = 350. The accumulated tax amount is 350 and the
accumulated taxable basis is 4000.
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