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How to set up withholding tax in Aico

Modified on Fri, 24 May 2024 at 02:33 PM

In 24.1, Aico introduced support for withholding tax. 

This article shows how withholding tax is set up in Aico:

Withholding tax calculations

Withholding tax in the Aico document

Setting up the Aico tax calculation for Withholding tax

Withholding tax calculations

Withholding tax calculation: 

Withholding tax (WHT) is calculated differently from normal gross tax and applied to the accounts receivable (AR) or accounts payable (AP) lines rather than normal taxes which are applied to the GL lines. It is calculated as a percentage which is deducted from the gross amount in full.

For example, 10% withholding tax on EUR 1000.00 = EUR 100.00

The requirement here is then that the AR or AP line is reduced by that 10% and a new WHT line is added to the document containing that 10%. 

Even when working with SAP, withholding tax is calculated using the Aico generic tax calculation rather than the SAP tax calculation and your Aico Delivery Team will have configured both when using WHT with normal taxes in SAP.

Withholding tax in the Aico document

The withholding tax calculation relies on a minimum of three fields being set for the withholding tax to be posted :

  1. The WHT Code (1) 
  2. WHT percentage (2)  
  3. The GL account number (3)

In the example below, the user has entered three GL lines which sum to EUR 6,000.00. The GL lines have a regular gross tax code of A1, which applies 15% as VAT. The AR line must also therefore be EUR 6,000.00 to balance the posting. However, the AR line has a 10% withholding tax applied.

 

The gross tax is calculated using the SAP tax calculation, as it relies on tax code A1 being set up in SAP. However, the WHT line is calculated using the Aico tax calculation.

Setting up the Aico tax calculation for Withholding tax

Start by setting up withholding tax code(s) in the tax code table. This works the same way as normal taxes, although WHT offers a bit more flexibility regarding where you set the percentage and GL account as these are often determined manually by the user when they are creating the posting.

(1) The tax code is mandatory. Depending on the requirement, there may be only one generic tax code, such as a WHT, where the user is going to enter the percentage and GL account in the document each time. Or there may be many tax codes where different percentages and GL accounts are defined against each WHT Code.

(2) Give the WHT code a name. Again this can just be Withholding tax where the tax code is generic. Or, for example, Withholding tax goods supply Brazil, Withholding tax services Mexico, where you are specifying many different withholding taxes.

(3) Set the VAT percentage. A percentage is mandatory. However, depending on how you set up the tax calculation task, this can be overridden in the document.

(4) Set the GL Account. A GL Account is not mandatory. Depending on how you set up the tax calculation task, this can be overridden in the document.  

(5) Select the Withholding Tax type. This determines how the calculation is performed.

Note: You can also set a pre-defined cost center for the WHT line.

Note: You can also set a pre-defined cost center for the WHT line.

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