Withholding Tax Calculation Rules

Calculation Rules is used to enter and maintain the details for a particular withholding tax code.

The Calculation Type for the withholding tax code determines how the withholding tax rate is defined.

If the Calculation Type is Cumulative, which calculates tax on the cumulative taxable value for the tax time frame, the tax rate can vary according to the cumulative taxable value. Therefore, you can enter a series of taxable value ranges and an associated fixed amount and tax rate.

If the Calculation Type is Non cumulative individual, or Non cumulative total, which calculates the tax on the total of the taxable transactions selected for the run, or on each individual taxable transaction, only a single tax rate is used.

Calculation Rule Code

A code to uniquely identify the calculation rule within the withholding tax code. This might be a sequential number or a reference code for the tax range.

Description

The description of the withholding tax calculation rule.

Start Date

The first date on which this set of withholding tax rules apply. The year must be entered as four digits.

End Date

The last date on which this set of withholding tax rules apply. The year must be entered as four digits.

Minimum to Withhold

The minimum amount of withholding tax that can be withheld. If the calculated withholding tax is less than this value, no tax is withheld. For example, if the minimum value is 100 and the tax due is calculated as 40, then no tax is withheld. If the tax is calculated on a cumulative basis, this minimum is applied to the total tax calculated. Whereas, if the tax is calculated on a non-cumulative basis, this minimum is applied to the tax calculated for each individual taxable transaction or set of taxable transactions.

Minimum Non-Taxable Base

The amount that is not liable for withholding tax. If the withholding tax legislation specifies that the first tax band, or base amount, is not taxable, you must specify that amount here. There are two ways in which the non-taxable base is treated, depending on whether the withholding tax calculation type is cumulative or non-cumulative.

If the withholding tax Calculation Type is non-cumulative, tax is calculated for a transaction or set of transactions only if its total value exceeds the non-taxable base. For example, if the non-taxable base is 1000 and the taxable transaction value is 5000, then withholding tax is calculated on the 5000. Conversely for the same non-taxable base of 1000, a transaction value of 800 means that withholding tax is not calculated.

If the Calculation Type is cumulative, the non-taxable base amount is deducted from the cumulative total of transactions and withholding tax is calculated on the remainder. That is, withholding tax is calculated only on the amount by which the cumulative total exceeds the non-taxable base. For example, if the non-taxable base is 1000 and the cumulative total of taxable transactions is 5000, then withholding tax is calculated on 4000.

Minimum Unit Price

If the Calculation Type is Invoice Cumulative (Argentina), enter the required minimum unit price. The default value of minimum unit price is 0.00 and is validated against the highest unit price during the withholding tax calculation.

Percentage

The percentage of withholding tax to be calculated. If withholding tax is calculated on a non-cumulative transaction basis, this percentage is calculated on the individual transaction value or on the total of the selected taxable transactions. If withholding tax is calculated on a cumulative basis, this is the percentage tax to apply when the cumulative taxable value falls within the associated range of values. This percentage is only calculated on the amount of the total taxable value that falls within the current range.

Selection Value 1-5

The transaction value that must exist in the appropriate selection field on the transaction. These fields only appear if the selection value fields are selected for the calculation rules. For example, if withholding tax only applies to transactions with a journal type of XYZ, then Journal Type must be chosen as a selection value field for the withholding tax calculation rules, and the value XYZ must be entered on the calculation rule.