3362798 - Partial Clearing of Supplier Invoice with Supplier Charge/Credit (Israel)

When clearing Supplier Invoice with Document Type - Other Receivable i.e, Supplier Charge/Credit partially  or Supplier Invoice with Credit memo( without recording withholding taxes ) then you have observed an issue with the calculation of withholding taxes.
The same calculated Withholding Tax Amount reflects in the Withholding Tax Return.

SAP Business ByDesign

1. Go to Payables work center.

2. Click on Supplier Accounts view.

3. Select the Supplier ABC.

4. Click on View.

5. Select the Document Type - Supplier Invoice and Other Receivable.

6. Click on Clear Manually.

7. Here, you have observed the calculated Withholding Tax Amount is not as per your expectation.

For example: You have created a Supplier Charge of 20 ILS(Document Type - Other Receivable) and an invoice amount 100 ILS. You are clearing these documents. Applicable Tax Rate = 30%.

When you click on clear manually, the system will recalculate Withholding Tax on applied amount 20 ILS. It now clears 28.57 ILS from the invoice and the remaining balance is 71.43 ILS.

There is a Remaining Balance of 71.43 ILS in the clearing document, and the same amount appears in the Withholding Tax Return shown below, which is incorrect.The Remaining Balance is expected to be 80 ILS (100 – 20 ILS).

The initial clearing of Supplier Charge 20 ILS and invoice leads to a clearing of 28.57 ILS from the invoice because there is no provision of recording Withholding Tax on Supplier Charge/Credit.

The system assumes that a payment amount of 20 ILS (Supplier Charge) is to be cleared as there is no Withholding Tax recorded on Supplier Charge and calculates 28.57 ILS from invoice is to be cleared.

Note: In the case of a Credit Memo the Withholding Tax is recorded and the same procedure applies. However, the system knows that is the payment amount is 14 ILS and  Withholding Tax Amount is 6 ILS, that needs to be cleared if the net amount is 20 ILS of Credit Memo.

Since there is no provision of recording Withholding Tax on Supplier Charge/Credit like Credit Memo to ensure the system clears the correct amount from the invoice, the Supplier Charge must be posted including Withholding Tax Amount.

Basically, the system assumes that a payment amount of 20 ILS (Supplier Charge) is to be cleared without Withholding Tax Amount on supplier charge and system calculates that 28.57 from invoice is to be cleared for the same using below formula where “X” is the amount to be cleared from invoice and 30% is current rate and 20 ILS is the amount of supplier charge.

X – 30%(X ) = 20 ILS

For example, the below screenshot shows the Supplier Charge = 20 ILS – 30%(20) ILS  = 14 ILS.

As a result, the system will calculate 20 ILS as the amount to be cleared for an invoice,  including Withholding Tax Amount = 6 ILS.

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