Supplier tax decuction or withholding tax

Requirement

It is a common requirement that payments made to certain groups of suppliers are treated as taxable under the income tax rules of a country. The payee is responsible for deducting tax from supplier payments, reporting these tax deductions on a periodic basis, paying the tax deducted to the relevant tax authorities and certifying that the income tax has been deducted and reported for each supplier.

M3 solution

There are four possible methods for processing and controlling supplier tax deductions, accounting and reporting. The selected method will be determined by country specific rules:

• Alt 1, where supplier payments are reported for tax purposes but no tax deduction is made.

• Alt 2, where tax deductions are made on supplier payment and then reported to tax authorities.

• Alt 3, where a supplier tax deduction record is made on invoice entry, but the tax deduction is not accounted for until the supplier payment is recorded.

• Alt 4, where the tax deduction is accounted for at the entry of the supplier invoice.

Configuration guidelines

Program ID	Program name	Description or comment
CRS165	Number Series. Open	Series 84-* Tax Deduction Certificates
CRS624/F	Supplier. Define Purchase Financial	Supplier Tax ID Number Tax Deduction Method
APS035	Settings. Supplier Tax
APS025	Activity Code. Open
APS905	Settings – Accounts Payable	Supplier Payments – setting 260: Cleared
CRS063	Supplier Service Codes. Open
CRS667	Withholding Percentage. Define by Date
CRS395	Accounting Rule. Set
APS425	Supplier Tax Report. Display Invoices
APS430	Supplier Tax Report. Create Proposal
APS470	Supplier Tax. Create Certificate
APS555	Supplier Tax. Print Details