SAP Ariba helps buyers and suppliers improve invoice accuracy, eliminate exceptions, accelerate payment, improve on-time payment, and provide better visibility of invoice status. This list of improvements also includes invoices with withholding tax. 

Ariba Network helps you with withholding tax in the following ways:

Structured invoice content helps buyers calculate withholding tax
For most countries, the buyer’s ERP system calculates withholding tax after receiving invoices and reduces the amount due according. 

Invoices contain information that helps buyers determine whether withholding tax applies, which allows their ERP systems to derive the related withholding tax code. 

The calculation of withholding tax and validation of other taxes becomes easier when suppliers submit invoices in a structured, consistent, and reliable form through Ariba Network rather than through paper.

Supplier profiles or supplier information management
Most information used to determine, calculate, or validate withholding tax is vendor-master specific, so buyers might collect this information through collaborative supplier profiles on Ariba Network or through Ariba Supplier Information Management and synchronize with their vendor master.

Including withholding tax on remittance advice documents
Ariba Network allows buyers to include withholding taxes in remittance advice documents in a column named "Adjustments." This column is particularly important when the buyer calculates withholding tax in countries such as India or the United States. 

SAP Ariba is planning to extend the remittance advice to include a column specifically for withholding tax as well to more clearly call out reductions in payment amounts to suppliers.

Including withholding tax in purchase orders or invoices
For countries with complex tax regulations, such as Brazil, where buyers have more knowledge of tax rules than suppliers, Ariba Network allows buyers to include tax on purchase orders. 

When suppliers perform a PO-Flip, Ariba Network copies the withholding tax amount to the invoice. This concept applies to withholding tax in countries such as Chile, Colombia, Mexico, or Spain. Alternatively, per the local business practice, the supplier can include the withholding amount on the invoice even if the buyer has not included on the PO.

Tell us
How does withholding tax affect your business process, invoices, or policies and procedures? If you’re a buyer, do you declare it in remittance advice? Use the Comments field at the bottom of this article to tell us—we’d like to know!