1. Localizations for Japan Implementation Guide
  2. Understanding the Withholding Process

Understanding the Withholding Process

The Calculate Withholding - Japan (R7500090) program calculates the withholding for Japan, updates the status of the existing pay item, and creates these additional pay items:

  • A negative pay item for the withholding amount with the same payee, pay status, and due date as the original voucher pay item.

  • A positive pay item for the withholding amount using the tax authority in the supplier master record.

    You can specify a different tax authority in the Tax Authority for A/P processing option.

If you leave the Withheld Pay Status Code processing option blank, the system assigns a pay status of H (hold) to pay items for tax authorities, thus enabling you to accumulate withholdings and pay them on a periodic basis.

You use the Withholding Tax Basis processing option to specify whether to calculate the withholding amount based on the gross amount or the taxable amount. If you use the taxable amount to calculate the withholding amount, the system returns an error for any pay item that does not have a taxable amount and does not process that pay item.

To calculate the correct withholding amounts for both taxable and not-taxable amounts, you must run the Calculate Withholding - Japan program twice: once, using the gross amount; and again, using the taxable amount. You can use data selection to select only not-taxable transactions when you run the Calculate Withholding - Japan program using the gross amount, and then run the Calculate Withholding - Japan program using the taxable amount for all remaining transactions. Or, you can run the Calculate Withholding - Japan program using the taxable amount, enabling the program to generate errors for all not-taxable transactions; and then run the Calculate Withholding - Japan program using the gross amount to calculate the withholding amount for those transactions.

The system stores the withholding information in the Withholding Tax Detail - Japan (F750411) table.

Additional results to consider are:

  • If you change the default pay status of the original pay item, the system changes the default pay status for the negative pay item.

  • The negative pay item offsets the amount of the original pay item when you process the original and negative pay items for payment.