Digitisation of the withholding tax process

The next step towards digital tax compliance

Ensuring tax compliance is one of the main jobs of tax officers. Tax Technology is the digital tool that helps them to transparently process tax-related cases and to document them in a tamper-proof fashion. While some taxes have been in the focus of TaxTech solutions and tax departments for some time, withholding tax has long been neglected. Since tax auditors have started looking at withholding tax submissions, however, digital solutions for the processing of complex withholding tax cases have been in higher demand.

WITAX

The TaxTech solution for the consistent digital processing of withholding tax related cases acc. to § 50a EStG


WITAX gives tax departments a withholding tax solution that is integrated into SAP and helps them ensure tax compliance in the field of withholding tax. WITAX is a TaxTech solution that:
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  • digitises the entire withholding tax process
  • largely automates the identification of receipts from the entire purchase-to-pay process that are subject to withholding tax
  • automates assessment using a decision tree supported by algorithms
  • facilitates honouring and reporting processes

WITAX maps the entire withholding tax process

Automated identification of receipts subject to withholding tax

Previously, 3 to 4 people in a company were involved in determining whether a receipt is subject to withholding tax or not. Going through 1,000 receipts or more to find the 70 or so that are actually subject to withholding tax, resulted in massive additional costs and time.

​​​​​​​WITAX imports receipts directly from the SAP system (SAP FI and SAP MM module), automatically looks for receipts subject to withholding tax, independently determines foreign procurement and filters on the basis of many other decision making criteria that can even be tailored to customer requirements. This not only takes the strain off of tax departments, but also all departments that were previously asked to answer the questions of their Tax Department colleagues, including Procurement, Marketing and the directors. The system also eliminates laborious and error-prone exporting and importing lists and receipts as well as the mailing of questions and tables.

Independent assessment and analysis of receipts subject to withholding tax

Until now, many companies lacked a complete and compliant honouring system and had no up-to-date overview of cases relevant to withholding tax. Often, companies didn't even now if they paid too much or not enough withholding tax and buyers were unable to tell whether withholding tax was to be paid, as that isn't even their field of expertise.

WITAX allows for a transparent, traceable and tamper-proof assessment of receipts subject to withholding tax. To this end, WITAX uses an algorithm that guides users through a digital decision making tree using simple, easy-to-understand questions. The result of this assessment process is an automatically created and correct assessment of said receipts.
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The system also recognises recurring receipts, automatically assesses them and determines tax code and rate. When using WITAX, receipts are honoured using a digital, logically built and consistent process. In the process, payments are halted until the final withholding tax evaluation has been made. During evaluation, the system also takes into account exemption certificates. Apart from comprehensively mapping special cases in the decision making tree, WITAX also offers an integrated chat function to discuss outstanding items directly with tax experts inside the company or external tax advisors. Thanks to the solution's modular design, company-specific requirements can be added to it.

Digital reporting

Until now, many companies used to file withholding tax returns using manually filled in CSV format forms. Even tax certificates for all contractual partners were often issued manually.

WITAX calculates the correct amount of withholding tax to be reported automatically at the push of a button. It even takes care of creating tax return documents for the revenue agency and tax certificates for contractual partners automatically. Even the correct tax rates and limit values for special cases are stored in WITAX.

WITAX convinces across the entire process

WITAX supports tax departments by ensuring that:
 

  • ​​​​​​​all cases subject to withholding tax are honoured
  • all tax certificates are issued and sent out automatically
  • exemption certificates are up to date
  • returns are sent to the revenue agency completely, correctly and on time
  • tax certificates for all contractual partners are issued correctly and stored in WITAX
  • However, WITAX also facilitates the work of other departments that spend a lot of time with withholding tax such as answering questions that the tax department might have in this context: Sales, Marketing, HR and the directors are only a few of those that make purchases subject to withholding tax and that are supported by WITAX.
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Ralph Schmieder, DCCS