Finance & Controlling
What is Withholding Tax?
Tax withheld from payments to suppliers and remitted to authorities, configured by withholding tax type and code.
SAP's extended withholding tax handles calculation at invoice or payment, plus reporting such as 1099 in the US. Supplier master data must carry correct withholding settings. Errors show up in tax reports and payment amounts.
Related terms
Accounts Payable
The FI sub-ledger that manages supplier invoices, liabilities, and outgoing payments.
Tax Code
A two-character key that determines tax type, rate, and GL accounts for sales tax, VAT, or use tax postings.
Automatic Payment Program
The FI program that selects due open items and creates outgoing payments and payment media for suppliers or customers.
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