Prerequisite
Set up Payables for Automatic Withholding Tax. See: Setting Up Withholding Tax.
Enter invoices:
For invoices, Payables defaults the withholding tax group from the supplier site to the invoice and then to the invoice distribution. Accept this default or enter a different withholding tax group for an invoice or invoice distribution.
For recurring invoices, enter a withholding tax group for a recurring invoice template. When you create invoices, Payables automatically assigns the withholding tax group from the recurring invoice template to all invoice distributions created for each invoice. See: Entering Recurring Invoices.
For expense reports, assign a withholding tax group to an expense report header. Payables defaults the withholding tax group to all new expense items created for the expense report. Accept or modify the default withholding tax group for each expense item. When you import the expense report using Expense Report Export, Payables automatically assigns the withholding tax group assigned to each expense item to the invoice distribution created from the expense item. See: Entering Expense Reports, Oracle Internet Expenses User Guide and Expense Report Export Program.
Apply withholding tax to invoices:
Payables automatically applies withholding tax based on your setup: either during Invoice Validation or during payment processing.
Payables groups invoice distributions and creates Withholding Tax type distributions depending how the Automatic Offsets option is set. The Withholding Tax type distributions are negative amounts unless the invoice is a credit/debit memo.
If Automatic Offsets is set to None, then Payables groups invoice distributions with the same Withholding Tax type tax group and creates one Withholding Tax type invoice distribution per Withholding Tax type tax code.
If Automatic Offsets is set to Balancing, then Payables groups invoice distributions with the same withholding tax group and the same balancing segment and creates one Withholding Tax type distribution per Withholding Tax type tax code.
If Automatic Offsets is set to Account, then Payables groups invoice distributions with the same withholding tax group and the same GL account and creates one Withholding Tax type invoice distribution per Withholding Tax type code.
In addition to creating the withholding tax distributions, Payables also:
Updates the Withheld Amount field of the invoice to reflect the amount of the withheld tax.
Reduces (increases for Credit/Debit memos) the amount of the scheduled payments for the invoice to reflect the amount of the withheld tax.