What is expanded withholding tax in SAP FI - Financial Accounting?

SAP Term: expanded withholding tax

• Component: FI

• Component Name: Financial Accounting

• Description: A type of withholding tax in the Philippines for which the taxes withheld on income payments are estimated. Income recipients are still required to file a tax return, and either pay the difference between the tax withheld and the tax due, or they are refunded accordingly. An example of an income payment subject to expanded withholding tax is a medical fee paid to a medical practitioner.

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• Key Concepts: 
  Expanded withholding tax (EWT) is a type of tax that is withheld from payments made to suppliers or vendors. It is a form of indirect taxation that is collected by the government from the payer and remitted to the government. The payer is responsible for calculating, collecting, and remitting the tax to the government. 
  
  How to use it: 
  In SAP Financial Accounting, expanded withholding tax can be set up in the system by creating a withholding tax code. This code will define the rate of withholding tax, as well as any exemptions or deductions that may apply. The withholding tax code can then be assigned to a vendor master record, so that when payments are made to that vendor, the withholding tax will be automatically calculated and deducted from the payment. 
  
  Tips & Tricks: 
  When setting up expanded withholding tax in SAP Financial Accounting, it is important to ensure that all relevant information is entered correctly. This includes the rate of withholding tax, any exemptions or deductions that may apply, and any other relevant information. It is also important to ensure that all payments are correctly coded with the correct withholding tax code so that the correct amount of withholding tax is deducted from each payment. 
  
  Related Information: 
  For more information on expanded withholding tax in SAP Financial Accounting, please refer to SAP Help documentation or contact your local SAP support team.