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Administrator Guide
Last Updated: 2026-09-18
Steps: Set Up Withholding Taxes

Steps: Set Up Withholding Taxes

Security:
Set Up: Tax
 domain in the Common Financial Management functional area.
You can configure Workday to automatically calculate and post withholding tax at the line level on taxable documents. This automation:
  • Reduces manual entry mistakes and calculation errors.
  • Enables you to comply with tax withholding and reporting requirements.
  1. When you want to pay your tax authority with supplier invoices, create the tax authority from an existing business entity and select your supplier.
  2. Select the
    Withholding Tax
     check box for Workday to calculate withholding taxes for spend and revenue transactions. You associate these tax categories with withholding tax rates.
  4. Access the
    Maintain Withholding Tax Codes
     task.
    Option
    Description
    Country
    You can configure withholding tax codes by country, assigning multiple withholding tax rates to each tax code. During transaction processing, you select a withholding tax code for each document line that is subject to withholding tax. Workday calculates a separate amount for each tax rate of the tax code.
    Tax Rate
    The withholding tax rates available for the country. Specify 1 or more rates that collectively make up a complete tax percentage for the tax code.
    Inactive
    When you select this check box for a withholding tax code that you no longer use, Workday:
    • Doesn't display inactive withholding tax codes in prompts on taxable documents.
    • Keeps inactive withholding tax codes on existing transactions, including documents that aren't complete yet.
    • Still displays inactive withholding tax codes in tax declarations and standard tax reports.
    When you select
    Inactive
    , replace any inactive tax codes that are currently set as defaults on tax rules with an active withholding tax code before you save the configuration tasks.
    You can select inactive withholding tax codes from the
    Inactive Tax Codes
     prompt group when you set up tax declarations and reports.
  6. Configure the
    Withholding Tax Payable
     account posting rule for your company. Posting to a liability, asset, or expense account depends on the collection or payment of taxes.
  7. Configure how Workday populates tax attributes on revenue transactions.
  8. Configure how Workday populates tax attributes on spend transactions.
  9. (Optional) Configure withholding tax exemptions.
When you create taxable documents such as customer invoices and supplier invoices, Workday calculates the withholding tax amounts and resulting accounting for the lines. Workday also calculates the withholding tax accounting for realized payments on supplier invoices during settlement.
For a list of tax-related reports, access
Workday Standard Reports
 and select the
Set Up Taxes
 report category.