Prerequisite

• (Optional). You may want to customize Automatic Withholding Tax to perform special behavior based on your local requirements. For example, you may want to use a Penalty AWT Rate Type for a specific supplier. Or, you may want to round all calculated withholding tax amounts up to the nearest dollar. If you want Automatic Withholding Tax to perform any special behavior, customize your AP_CUSTOM_WITHHOLDING_PKG. See: Customizing Automatic Withholding Tax.

To set up Payables for automatic withholding tax:

1. To allow Automatic Withholding Tax for your employee expense reports and supplier invoices, enable the Use Withholding Tax Payables option. Choose your other withholding tax Payables options. See: Withholding Tax Payables Options.

2. Create a unique Pay Group for each tax authority. See: Lookups, Oracle Payables Implementation Guide.

3. Enter each tax authority as a supplier, with supplier Type Tax Authority. Assign the appropriate unique Pay Group to the supplier. See: Entering Suppliers.

4. Review the Payment Format. Assign the format to a Payment Process Profile that uses the Tax Authority Remittance Advice as its separate remittance. See: Setting Up Formats.

5. Define your Withholding Tax type tax codes and tax rates. Assign tax authority suppliers to the tax codes. See: Tax Codes.

6. In the Withholding Tax Details window, select your setting for the option: Don't Create Zero Amount Accounting or Invoices.

7. To allow automatic withholding of multiple taxes per expense report or invoice, define your withholding tax groups. See: Withholding Tax Groups.

8. Enter withholding tax details for suppliers: See: Defining Tax Details.

9. Define withholding tax exemptions and rate exceptions for all of a supplier site's invoices or for specific invoices of a supplier site. See: Withholding Tax Certificates and Exceptions.