3793874 - Withholding Tax (model 123) not applied on Manual Journal Entries or Payments in S/4HANA Cloud Public Edition

• Withholding tax (model 123) is not calculated when posting manual journal entries because no business partner field is available to derive withholding tax settings.
• For outgoing payments on account (without an invoice/open item), withholding tax is not calculated even when the supplier has a withholding tax indicator and “subject to withholding” is set.
• Withholding tax is calculated correctly only when posting through the supplier invoice process; outside of the invoice flow it is not proposed.

SAP S/4HANA Cloud Public Edition

1. Configure Business Partner 1 with WHT indicator BC and Business Partner 2 with CC, both subject to withholding tax.
2. Post a supplier invoice for Business Partner 1 via Create Supplier Invoice; WHT is calculated correctly.
3. Create a journal entry via Post General Journal Entries; no Business Partner field is available to determine WHT.
4. Post an outgoing payment for Business Partner 2 via Post Outgoing Payment/Down Payment; WHT is not calculated.
5. Repeat the payment for Business Partner 1: WHT is still not applied.
6. Expected: WHT should be determined based on the Business Partner’s configured indicator.
7. Actual: WHT works for invoices but not for manual Journal Entries or Outgoing Payments.

• Automatic withholding tax calculation is supported only for supplier business transactions that create a supplier liability (for example, supplier invoices or down payment requests).
• A direct payment on account without an underlying supplier invoice or open item is not supported for automatic withholding tax calculation in the standard solution.

1. Create a Supplier Invoice using the appropriate interest expense account and process the payment afterward is the supported approach.
2. It allows a withholding tax to be calculated and included correctly in Modelo 123. 

KBA 3578497- Withholding Tax not automatically calculated while posting the payment in SAP S/4HANA Cloud Public Edition

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