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Administrator Guide
Last Updated: 2024-09-20
Steps: Configure Withholding Tax Rules

Steps: Configure Withholding Tax Rules

Security: These domains in the Common Financial Management functional area:
  • Set Up: Company General
  • Set Up: Tax
You can configure withholding tax rules so that Workday automatically populates the appropriate withholding tax codes when you enter taxable purchase and revenue documents.
  1. Access the
    Maintain Withholding Tax Item Groups
     task.
    Create groups to:
    • Organize purchase, expense, and sales items.
    • Use as dimensions in transaction tax rules for items.
    As you complete this task, consider:
    Option Description
    Tax Item Group Type
    Select the type of items that you want to include in the group. When you assign items to a group, you can include only items of the selected type. In withholding tax rules for items, you can use sales item groups for revenue rules and purchase item groups for spend rules.
    Country
    You can create multiple tax item groups of the same or different types for a country.
  2. Access the
    Assign Items to Withholding Tax Item Group
     task.
    Add specific purchase or sales items to your withholding tax item groups. When you select this item group as a dimension in withholding tax rules for items, Workday evaluates all items in the group. You can only assign a specific item to 1 group for each country.
  3. Access the
    Maintain Withholding Tax Statuses
     task.
    Create withholding tax statuses relevant to a country. It's best to use more precise names, such as
    Individual-Non Resident- J1
     or
    F1 Visa
    . You can then associate these tax statuses with companies, customers, and suppliers and use them as a dimension in tax defaulting rules for countries.
  4. Access the
    Edit Company Tax Details
     task.
    Configure withholding tax statuses by company to use as matching criteria in withholding tax rules for countries.
    As you complete the
    Tax Statuses
     tab, consider:
    Option Description
    Country
    Select a country to associate with a specific tax status for the company. You can only select 1 withholding tax status per country.
    Withholding Tax Status
    Select the appropriate tax status that applies to the company.
  5. Assign
    Tax Statuses
     by country to a supplier for tax defaulting.
  6. Assign
    Tax Statuses
     by country to a customer for tax defaulting.
When you create taxable purchase and revenue documents, Workday checks them against your withholding tax rules to determine the appropriate withholding tax code to use in transactions. If the rule dimensions and transaction data match, Workday uses the tax defaults from the matching rule line. Workday processes rule lines from the most specific match to the least specific match. Workday evaluates tax rules in this order:
  1. Withholding tax rules for countries.
  2. Withholding tax rules for items if the matching tax rule line for the country contains a tax rule for spend or revenue items.
    If the items on the transaction match a tax rule line for items, Workday uses the withholding tax code. The tax code comes from the matching rule line for the item instead of the country.
  3. Withholding tax rules for worktags if the matching tax rule line for the item contains a tax rule for spend items.