Setting up business partners for withholding tax and social contributions

• Specify tax classifications
• Link group tax codes to tax classifications
• Specify the business partner's withholding tax details
• Specify the tax base amount limits

The process to set up the details for business partners of which the invoices are subject to withholding tax and social contributions consists of the following steps:

1. Specify tax classifications, and link the tax classifications to the business partners.
2. Link the group tax codes to the tax classifications.
3. Specify the business partner's withholding tax details.
4. In some countries, the tax collector's office publishes maximum amounts for each supplier over which you must withhold income tax and/or social contributions. If tax base amount limits apply, specify the tax base amount limits.

Specify tax classifications

To specify tax classifications and link the tax classifications to the business partners:

1. In the Tax Classifications (tctax0116m000) session, define the tax classifications. For each classification, you can indicate whether withholding tax and/or social contribution applies to purchase invoices for business partners with the classification.
2. In the Invoice-from Business Partner (tccom4122s000) session, you can select your suppliers' tax classification.

Link group tax codes to tax classifications

To link the group tax codes to the tax classifications, you must define tax code exceptions as described in Defining tax exceptions.

1. In the Tax Exceptions by Country (tctax1100m000) or the Tax Exceptions by Country Set (tctax1101m000) session, specify the following data:

   • Order Origin
     Select Purchase for purchase orders, or select Purchase Invoice.
   • Tax Classification
     The tax classification.
   • Tax Code

     The group tax code for the tax classification.

     Ensure that the group tax code contains tax codes of the kinds of tax that correspond with the kinds of tax set up for the tax classification. You can only select group tax codes that you approved.

Specify the business partner's withholding tax details

The withholding tax reports, declarations, and payments must contain specific business partner details such as the business partner's fiscal number. To specify the business partner's withholding tax details, take the following steps:

1. In the Business Partners (tccom4500m000) session, double-click the business partner to start the details session.
2. Click Invoice-from to start the Invoice-from Business Partner (tccom4122s000) session, and on the appropriate menu, click Withholding Tax Data. The Business Partner Withholding Tax Data (tccom4127s000) session starts.
3. Specify the various details. You must specify the business partner's fiscal number.

Specify the tax base amount limits

You can specify the maximum tax base amount in two ways:

1. For a range of invoice-from business partners
   1. In the Income Tax & Social Contribution Limits (tctax0117m000) session, on the appropriate menu, click Generate. The Generate Limits of Income Tax and Social Contribution (tctax0217m000) session starts.
   2. In the Generate Limits of Income Tax and Social Contribution (tctax0217m000) session, specify the tax base amount limit for a range of invoice-from business partners and one type of tax (income tax or social contribution), tax category, and tax year.
2. For individual business partners

   In the Income Tax & Social Contribution Limits (tctax0117m000) session, specify the tax base amount limit for each combination of:

   • Invoice-from business partner
   • Type of tax, which can be income tax or social contribution
   • Tax category
   • Tax year