3788935 - Withholding tax in the posting uses the system exchange rate rather than the manually specified rate

In postings created via apps like "Create Incoming Invoices" and "Post Outgoing Payments", withholding tax is calculated using the exchange rate maintained in the "Currency Exchange Rate" app, not the manually entered rate.

SAP S/4HANA Cloud Public Edition

1. Open the "Create Incoming Invoices" app and create an invoice in a foreign currency.
2. Enter a manual exchange rate on the invoice in 'Local currency' tab.
3. Post or simulate the invoice.
4. Observe that withholding tax line item is converted using the exchange rate maintained in the "Currency Exchange Rate" app, instead of the manually entered rate, while other line items follow the manual rate.

In configuration activity "Define Exchange Rate Type for Withholding Tax Type" (ID: 104400), an exchange rate type is maintained for the relevant withholding tax type, so the system uses the exchange rate for that type instead of the invoice’s manual exchange rate.

1. Open configuration activity "Define Exchange Rate Type for Withholding Tax Type" (ID: 104400).
2. For the relevant withholding tax type, remove the exchange rate type entry (leave it blank) to allow withholding tax to use the manual exchange rate entered on the invoice.
3. Save the configuration.
4. Recreate or repost the invoice with a manual exchange rate and confirm that withholding tax is calculated with the manual rate.

• Refer to: Defining Exchange Rate Type for Withholding Tax Type

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