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<ManualTopic ID="/baanerp/tc/onlinemanual/000420" xml:lang="en">
	<Header>
		<Title xmlns:ssa="http://www.ssaglobal.com" xmlns:HTML="http://www.w3.org/TR/REC-html40">Withholding tax and social contributions</Title>
		<Keyword><Level1>Withholding tax</Level1>
			<Level2>overview</Level2>
		</Keyword>
		<Keyword><Level1>Social contributions</Level1>
			<Level2>overview</Level2>
		</Keyword>
	</Header>
	<GeneralSection ID="concept"><Paragraph>In many countries, in specific situations, companies are legally required to retain payable income tax and/or social contribution from the payments of purchase invoices, and pay the amount directly to the tax collector’s office. For example, withholding income tax and social contributions can apply to services provided by subcontracting companies, employment agencies, and self employed workers.</Paragraph>
		<Paragraph>The withheld tax and social contribution usually consists of a fixed percentage. In some countries, different rates apply to different portions of the transaction amounts. The amounts to be withheld can consist of combinations of income taxes and social contributions. Depending on local rules, the payment is due either when the invoice is paid, or periodically. Companies must periodically submit a report to declare the amount of withheld and paid tax and social contribution.</Paragraph>
		<Paragraph>In addition, in some countries part of the social contribution must be paid by the customer. This part of the social contribution is charged over the invoice amount and must be posted as extra costs, or company expenses.</Paragraph>
		<Paragraph>As a result, various kinds of tax can apply to an invoice. Separate tax codes are required to calculate the amounts of withholding income tax and social contributions, and to register the tax amounts of the invoice in the tax analysis. Group tax codes are used to link a number of tax codes to a transaction.</Paragraph>
	</GeneralSection>
	<GeneralSection><SectionTitle>To register and declare withholding tax and social contributions</SectionTitle>
		<Paragraph>You can apply withholding tax and social contributions in combination with <Link href="/baanerp/tc/glossary/glossary#000338" role="glossary">value added tax (VAT)</Link> and <Link href="/baanerp/tc/glossary/glossary#000421" role="glossary">sales tax</Link>. The set up procedure is described in <Link href="/baanerp/tc/onlinemanual/000422" role="manual">To set up withholding tax and social contributions</Link>.</Paragraph>
		<Paragraph>The procedure to set up and prepare the withholding tax and social contributions declaration is similar to the set up and preparation of value added tax declarations.</Paragraph>
	</GeneralSection>
	<RelatedTopics><SectionTitle>Related topics</SectionTitle>
		<RelTopic><Link href="/baanerp/tc/onlinemanual/000422" role="manual">To set up withholding tax and social contributions</Link>
		</RelTopic>
		<RelTopic><Link href="/baanerp/tc/onlinemanual/000137" role="manual">To set up a tax declaration</Link>
		</RelTopic>
		<RelTopic><Link href="/baanerp/tc/onlinemanual/000429" role="manual">To process tax declarations</Link>
		</RelTopic>
	</RelatedTopics>
</ManualTopic>
