Withholding Tax for PPH 23 Calculation from SD (country Indonesia)

Tax that is charged at the beginning of the payment flow in some countries. Usually, the party that is subject to tax does not pay the withholding tax over to the tax authorities himself.

When a customer that is authorized to deduct withholding tax pays invoices from a vendor subject to withholding tax, the customer reduces the payment amount by the withholding tax proportion. <Taken from: http://help.sap.com/saphelp_46c/helpdata/en/2d/936b3ae886616ae10000000a114084/frameset.htm>

Withholding tax in Indonesia and commonly in sales transaction is usually used when selling service transaction to customer. The amount of customer should paid for his/her payment will be reduced by the withholding tax proportion.

Here I have two scenarios of when withholding tax can involve, but for this note I will explain holding withholding tax from billing SD.

1. On Posting Billing from SD

>> Billing:

Dr. AR                                    1296

Dr. Prepaid PPh 23                  24

Cr. Sales                                 1200

Cr. PPN Out                            120

>> Incoming Payment:

Dr. Bank                                 1296

Cr. AR                                     1296

2. On Posting Incoming Payment

>> Billing:

Dr. AR                                    1320

Cr. Sales                                 1200

Cr. PPN Out                             120

>> Incoming Payment:

Dr. Bank                                1296

Dr. Prepaid PPh 23                 24

Cr. AR                                    1320

To integrate with billing, here I want to note down the steps how to do that. Before that, here I attached the sap notes that I had implemented. Here, I refer the note 178824 (Withholding Tax From SD for Countries Other than Argentina).

Steps:

1. SD – Create Condition Type
(IMG > Sales and Distribution > Basic Functions > Pricing > Pricing Control > Define Condition Types), copy from withholding tax condition J1W1, J1W2, or J1W3.

2. SD – Create Routine
(T-code: VOFM, path: Requirement > Pricing).

  • Create a new requirement formula for access sequence using transaction VOFM, menu path Requirements -> Pricing
  • Copy routine 83 and create the new one.
  • Apply the source code below to the form routine FORM KOBEV and KOBED.
  • Activate the requirement formula

3. SD – Check Condition Table 397
(IMG > Sales and Distribution > Basic Functions > Pricing > Pricing Control > Define Condition Table) , make sure that condition table 397 contains the key fields:

  • Country [ALAND] (Flags: Key)
  • Tax rel. classif. (J_1ATAXREL) (Flags: Key, Field, Text).

4. SD – Define access sequence.
(IMG > Sales and Distribution > Basic Functions > Pricing > Pricing Control > Define Access Sequence)

Use access sequence J1AG or copy from JIAG if you want to define the new one. Make sure that field J_1ATXREL is an input/output field.

5. SD – Define pricing procedure and assign condition type
(IMG > Sales and Distribution > Basic Functions > Pricing > Pricing Control > Define and Assign Pricing Procedure > Maintain pricing procedures)

Set routine created on steps 2 in pricing procedure field requirement.

6. FI – Define Withholding Tax Type for Invoice Posting
(IMG > Financial Accounting (New) > Financial Accounting Global Setting (New) > Withholding Tax > Extended Withholding Tax > Calculation > Withholding Tax Type > Define Withholding Tax Type for Invoice Posting)

7. FI – Define Exchange Rate Type for Withholding Tax Type

(IMG > Financial Accounting (New) > Financial Accounting Global Setting (New) > Withholding Tax > Extended Withholding Tax > Calculation > Withholding Tax Type > Define Exchange Rate Type for Withholding Tax Type)

8. FI – Assign Withholding Tax Type to Company Code

(IMG > Financial Accounting (New) > Financial Accounting Global Setting (New) > Withholding Tax > Extended Withholding Tax > Company Code > Assign Withholding Tax Type to Company Code

9. FI – Define Accounts for Withholding Tax to be Paid Over
(IMG > Financial Accounting (New) > Financial Accounting Global Setting (New) > Withholding Tax > Extended Withholding Tax > Accounts for Withholding Tax > Define Accounts for Withholding Tax to be Paid Over)

10. FI – Assign Withholding Tax Code
(IMG > Financial Accounting (New) > Financial Accounting Global Setting (New) > Withholding Tax > Extended Withholding Tax > Calculation > Withholding Tax Code > Define Withholding Tax Code)

11. FI – Assign Condition Type to Withholding Tax Type
(IMG > Financial Accounting (New) > Financial Accounting Global Setting (New) > Withholding Tax > Extended Withholding Tax > Calculation > Withholding Tax Type > Define Withholding Tax Type for Invoice Posting)

12. FI – Maintain withholding tax in customer master data
(T-code: XD02, Company Code Data > tab Withholding Tax).

13. SD – Maintain condition record for withholding tax
(T-code: VK11).
Enter Tax Relevant Classification = Withholding Tax Code from Classification.

14. SD – Test withholding tax using report ZWTCHECK

Since, the steps are too long to write it down here. Thus, I provide the documentation in word document: Withholding Tax for PPH 23 Calculation (Steps by Steps).

Source code correction:

  1. Display Report ZWTCHECK
  2. Display Report ZWTCHECK

Reference:

http://help.sap.com/saphelp_46c/helpdata/en/2d/936b3ae886616ae10000000a114084/frameset.htm

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