HOW TO SETUP INSS WITHHOLDING TAX WITH FIXED RATE

Purpose:

How to customize the INSS withholding tax, specific for Brazil, without accumulation, used for all companies in Brazil.

Overview:

It will be explained in here, all the steps of the customizing starting from SD module until the final withhold line item generated on the FI document. For the INSS's setup was used a fixed rate, 11%, but at the end of this article there is a link to check how to customize the INSS using the new table, provided by government, where the rates could vary. 

SD Customizing:

In SD, the INSS is only set as a statistical condition, no influence in values.

First create a condition type INSS (V/06), you could copy from J1W1 standard condition type. 

Add this condition type for your pricing procedure (V/08) 

FI Customizing

Go to SPRO, to start the setup in FI

Create a new withholding tax type at time invoice post, INSS don’t have accumulation and the base amount in generally used as Gross amount, but it could depend for each business requirement, for NET amount as example. 

In SPRO, create a new withholding tax code for the tax type created before:

Use the percentage related to INSS rate, standard 11% and the posting indicator that would better fit on your scenario, here we have “1” set, where a line item is posted with the amount withhold from base value.

INSS in Brazil has a maximum for withheld; in SPRO just below the previous customizing you have this setting, remember you should put this information at tax code level for INSS. On this transaction you have the validity, so you can keep all the historic of changes, since this value is generally revised annually. 

Customer master data:

After all these steps are performed is just a matter of set this withholding tax to the respective customer and set validity and liability. FD02 /company code data / withholding tax tab: 

Results

Finally when a document for this customer is posted, you got the INSS withhold at the time of posting.

Conclusion:

The SD module customizing for INSS has no impact on the solution it's generally used only for the values to be available on the pricing.

All the remaining customizing is very easy, so every consultant should be able to customizing this withholding tax without so much effort. 

Criado por: Gustavo Machado, última alteração por Gustavo Oliveira em ago 09, 2013

Related Notes:

SAP Note 307701: Withholding tax is calculated incorrectly

SAP Note 615044: Withholding tax is not calculated

Source: How to Setup INSS Withholding Tax with Fixed Rate