To comply with the latest tax changes for the e-Invoice functionality, effective October 1, 2020, the XML file for the withholding tax functionality has been enhanced. With the recent changes, the withholding tax rate, reason, and nature code information has been made available in the XML file. In addition, the withholding tax amount is not deducted from the total invoice the XML file.
To ensure consistency in the financial overview based on the XML file information, the business logic for the withholding tax has also been enhanced.
The following enhancements have been made in Exact Globe Next and have affected the following menu paths:
Menu paths:
In the VAT codes maintenance screen, the new Nature drop-down box has been added and is displayed when the Withholding tax type has been selected. By default, the Nature drop-down box is left blank when creating withholding tax codes.
At the Nature drop-down box, the following options are available for selection:
Nature code
Description
RT01
ritenuta persone fisiche
RT02
ritenuta persone giuridiche
RT03
contributo INPS
RT04
contributo ENASARCO
RT05
contributo ENPAM
RT06
altro contributo previdenziale
You are now able to define the financial entry type for the reason codes at the Financial entry type field, in the Reason code screen. At the field, the options Sales and Purchase are available for selection.
Note that only the Sales financial entry type can be linked to the reason codes. Otherwise, the Link button is not available if the Purchase financial entry type is selected. For more information, see Product Updates 420, 419, and 418: Withholding tax functionality improved (Italian legislation).
When the Sales financial entry type is selected, the reason and tax codes must be defined. In the case that the defined tax code has been linked to other reason codes, the linking of the financial entry type to the reason codes is not allowed. The following message is displayed:
If the defined tax code has not been linked to other reason codes, the linkage is saved and displayed in the withholding tax reason overview screen.
A new element block, DatiRitenuta, has been added in the XML file. The element is only displayed if the withholding tax codes have the percentage of more than “0”, for the tax code 2 and tax code 3, in the invoices.
There will be multiple DatiRitenuta element blocks in the XML file when the invoices contain more than one withholding tax code. Each block represents one withholding tax code.
The following table illustrates the structure of the DatiRitenuta element block:
Element name
Value
TipoRitenuta
The nature code that has been selected in the VAT codes maintenance screen is displayed at this element.
ImportoRitenuta
The total withholding tax amount for the tax code is displayed at this element.
AliquotaRitenuta
The tax percentage for the tax code is displayed at this element.
CausalePagamento
The reason code linked with the tax code is displayed at this element.
The following is the sample of the DatiRitenuta element block in the XML file:
The value at the element ImportoTotaleDocumento element reflects on the total invoice amount including the withholding tax amount in the XML file.
The Ritenuta element is displayed when the invoice lines contain withholding taxes. The value “SI” is then be displayed at this element.
New fields have been made available in General ledger settings, under the General ledger and Journal sections.
General ledger section
Journal section
The following is the scenario of the generation of the general journal entry to offset the withholding tax amount in the invoice:
VAT table
VAT code
Tax type
Percentage
VAT type
1
VAT
6
Excluding
WH1
Withholding
4
N/A
WH2
Invoice lines
Line
Amount
Tax code 1
Tax code 2
Tax code 3
Tax amount 1
Tax amount 2
Tax amount 3
300
18
-12
-18
2
The following are the amounts in the invoice lines:
The general journal entry is generated in Exact Globe Next as follows:
The entry reflects the following information:
In the debtor card, two additional debtor terms are added under the Receivables option:
In the creditor card, the withholding tax term is no longer displayed under the Payables option:
The new settings that have been introduced for the generation sales invoice entries and payment terms are also made applicable for the payment reconciliation. In brief, the generation of the general journal entry for payment reconciliation works in reverse from the generation sales invoice entries and payment terms.
When performing the payment reconciliation, the amount to be reversed is based on the receipt amount that is matched to the invoice. In a situation where invoices are partially paid, the amount is be proportionally reversed.
The following scenario is the continuation of the scenario provided for the generation sales invoice entries and payment terms:
After processing the final invoice, the withholding tax offset entry is generated. When the payment has been received from a debtor, the withholding tax offset entry is then reversed. As a result, the full payment of 570 is received from the debtor and matched to the invoice.
Upon matching, the following general journal entry is generated:
In the debtor card, the withholding tax term is not displayed under the Receivables option:
In the creditor card, the withholding tax terms are displayed under the Payables option:
The following are the outcomes when the invoices are unmatched:
For more information, see Product Updates 421, 420, and 419: Updated E-Invoice features (Italian legislation) and Product Updates 421, 420, and 419: Support for customized style sheets in E-Invoice (Italian legislation).