Manage Withheld Tax on Customer Invoices
This document describes how you manage withheld tax on customer invoices.
Introduction
The functionality described in this document is used for applying withheld taxes on customer invoices. These are taxes not adhering to standard VAT or Sales tax functionality found in M3 BE. The functionality allows for selection of different tax types and setup of parameters determining when the tax is applied and how the tax amount is calculated.
Perception and Retention taxes are withholding taxes that are required by authority on the sales revenue of items or services. This withheld tax can be added (Perceptions) to or deducted (Retentions) from the invoice. There may be several perceptions and retentions depending on the company agent tax regime. Many countries are using withholding tax to combat tax evasion and sometimes impose additional withholding tax requirements if the recipient has been delinquent in filing tax returns or in industries where tax evasion is perceived to be common.
Limitations
The taxes are calculated at invoicing and are therefore not displayed anywhere else, such as on quotations, order confirmations or in 'Customer Order. Simulate Totals' (OIS110).
A summary invoice will not be created if withheld tax is to be applied on the header level of the invoice. That is, there will always be one invoice per delivery if a tax calculation code is found on the header level.
Withheld tax is not applied to the 'Deposit' amount and 'Remaining balance' amount when using 'Adv invoicing' 5='Deposit'. However, the taxes are applied to the delivery invoice, which means that the invoice amount differs from the displayed 'Remaining balance' amount.
When a withheld tax is present on an invoice the functionality in 'CO Invoice. Correct or Credit' (OIS380) is limited to 2='Credit and send new invoice' (CIME) and 'Select all' (SELA). These options are selected when (OIS380) is specified and you cannot change these options.
When using tax interfaces (Vertex or Avatax), you cannot include the tax in the base for the calculation of withheld tax on the line level.
Overview
To apply tax to an invoice, you must create a tax calculation code and ensure that the settings for selection of the tax calculation code are in place.
This involves setup in these two programs:
- First, you must create a tax calculation code in 'Tax Calculation Code. Open' (CMS236). A tax calculation code is created for a selected tax type. The tax type determines the available parameters controlling how the tax amount to be applied to an invoice is calculated. Tax calculation codes are created on the division level, meaning they are only valid on the same division level.
- Second, you must set up the criteria for selection of created tax calculation codes in 'Tax Calculation Code Selection. Open' (CMS237). This criterion determines which tax calculation code that should be applied to an invoice. The criteria are setup according to the selected tax type. One of the available control objects is tax regime. Tax regimes are setup in 'Tax Regime. Open' (CMS235). Optionally, a tax regime you can specify on a customer in 'Customer. Open' (CRS610/J) to be used with selection criteria in (CMS237).
Workflow for invoicing a customer order
The workflow includes setting up a tax calculation code and selection criteria as specified above. With these settings in place, a customer order can be invoiced.
When a customer order is invoiced that meets the selection criteria in (CMS237) and is applicable for tax according to the setup of the selected calculation code in (CMS236), a line is added to OINVOL with information type 64 (tax calculation code). This is in 'Invoice. Display Lines' (OIS351). The calculated amount is in local and foreign currency. If several calculation codes are connected to a single selection criterion, then each will have their own line in OINVOL according to their setup in (CMS236). For tax calculation codes on the line level, the tax details for each line are in 'Tax Calculation Code. Display Trans' (OIS352) in addition to the record in (OIS351) that displays the sum for all lines. You can run (OIS352) from (OIS351) through related option 20. A withheld tax box containing the applied tax calculation codes is presented on the invoice document.
You can add the tax calculation codes on the line level to the invoice document through configurable XML. The 'TDLTO1' field in the OIPRTD table is the line total value, which means that it is the tax amount for the line after adjusting for line discounts. Other fields in the table are not adjusted for the line discounts.
Accounting event OI20 147 is used for withheld taxes. The list of available control objects includes fields such as the 'Tax type' and the 'Tax calcn cd'.