Defining Withholding Tax Exemptions

Sometimes a supplier or customer is granted a full or partial exemption, or discount, from withholding tax. This may be a temporary or permanent exemption. This information is defined using Withholding Tax Exemptions (WTE).

The exemption percentage rate is entered for the account, and applies to a particular period of time. This enables you to record temporary exemptions that only apply until a specified date.

The withholding tax is calculated in the normal way for the account, and then at the end of the processing the exemption percentage is deducted to calculate the actual amount of tax due.

Withholding Tax Exemptions (WTE)

The Exemption Setup form contains the following:
Exemption Code
A unique code to identify the Exemption Setup record. You can enter a maximum of 15 characters
Withholding Tax Type
The withholding tax type for the account. This code is defined using Withholding Tax Types (WTT). See 'Adding and Maintaining Withholding Tax Types'.
Account Code
The nominal ledger account code that requires a specific withholding tax rate.
Description
A description for the Withholding Tax Exemption code.
Exemption Rate
The percentage of the normal withholding tax amount that should be used to calculate the final withholding tax for transactions posted to this account. The percentage can be between 0 and 100 and include up to two decimal places.
Start Date
The first date on which the exemption percentage applies.
End Date
The last date on which the exemption percentage applies.
Note: If the same withholding tax type and account code are used, but a different exemption code is entered, where the effective dates overlap a warning message is displayed, Overlapping date ranges are not permitted.