Tax, Withholding, and Financial Integration
Tax determination
Fusion Tax determines tax lines from the tax regime, tax, tax status, tax rate, and jurisdiction configured for the supplier site and the invoice. Tax is calculated during invoice validation and stored as tax lines and distributions. Tax recovery rates decide how much tax is recoverable; self-assessed and use tax are handled through tax configuration rather than by editing invoice lines.
Withholding tax
Withholding is configured with withholding tax types, rates, and withholding tax groups, assigned to the supplier site. Payables calculates withholding at invoice validation and deducts it at payment. A withholding tax invoice is generated for reporting and remittance to the tax authority, and withholding tax reports and certificates support filing. Withholding is separate from transaction tax; do not model it as a negative invoice line.
Subledger accounting and GL
Create Accounting turns invoices, payments, adjustments, and withholding into subledger journal entries using the accounting method and journal line rules. Transfer to General Ledger moves entries to GL; Post updates balances. Payables periods and GL periods are separate, so Payables can close before GL.
Worked example
An invoice is 10,000 with 10% withholding. At validation, Payables records expense 10,000 and liability 10,000. At payment it debits the liability 10,000, credits cash 9,000, and credits withholding payable 1,000. The withholding tax invoice records the 1,000 due to the tax authority.
Traps
Withholding is deducted at payment, not at invoice entry. Changing a supplier site's withholding group affects future invoices, not posted ones. Tax and withholding are configured and reported separately.