R12: AP: How Does Calculation Of Withholding Tax At Invoice Time And Payment Time Work (Doc ID 788004.1)

Last updated on AUGUST 27, 2024

Applies to:

Goal

In release 12.1, a new feature is available that provides the ability to calculate Automatic Withholding Tax (AWT) at both invoice and payment time. This particular feature is used in Brazil.

So for example, two withholding groups are created, INV and PAY:

The tax codes in withholding group INV are:

ISS: rate 5%, Rank 1
IRPJ: rate 1.5%, Rank 1

The tax codes in withholding group PAY are:

PIS: .65%, Rank 1
COFINS: 3%, Rank 1
CSLL: 1%, Rank 1


Scenario: One invoice for $10,000. Fully paid.

At the time of validation the following withholding lines will be generated and withholding invoice will be created:

ISS = $500 (10,000 * .05)
IRPJ = $150 (10,000 * .015)

Total withholding taken at invoice time: $650

The payment base amount at payment time is calculated on the following formula:

Base amount = (Amount of payment/Amount Payable)* Sum Invoice Lines

Amount of payment = 9,350
Amount Payable = (10,000 - 650) = 9,350
Sum Invoice Lines = 10,000
Base amount = (9350/9350) * 10000 = 10000

PIS = $ 65 (10000 * .0065)
COFINS = $300 (10000 * .03)
CSLL = $100 (10000* .01)

Total Withholding Tax taken at payment time: 4$65

Total all withholding tax: $1115
Payment made to supplier: $8885

Solution

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