Some countries/regions, such as Italy, require that buyers withhold tax from payments for vendor invoices and remit the tax to the tax authority. In Australia, withholding tax must be withheld if a vendor does not provide an Australian Business Number. Because withholding tax applies only to vendor invoices, setup is done in Accounts payable.

Setting up withholding tax makes it more efficient to:

• Activate the calculation of withholding tax when paying a vendor invoice.

• Keep basis data about the vendor for reporting purposes.

When a payment is entered in a journal for a vendor who has been set up for withholding tax, the journal proposes this setup by default. You can edit the calculated amounts, select a different withholding tax, or deactivate the withholding tax calculation for a particular payment. When the payment is posted, the payment transaction text is copied to the transaction text field for the withholding tax transaction. You can use the transaction text to identify the withholding tax transactions that are associated with a specific invoice.

1. Click Accounts payable> Common Forms> Vendor Details .

2. (ITA) If you are setting up withholding tax for the Italian certification report, select a value in the Fiscal codefield.

3. On the Setuptab, select the Calculate withholding taxcheck box and a withholding tax group to activate the calculation when a payment is entered in a journal.

4. (ITA) If you are setting up withholding tax for Italian reports, on the Contact informationtab, enter values in the Birth date, Birth place, and Residence foreign country/regionfields.