Deduction Processing Rules

Global Payroll for Japan processes tax deductions for retirement allowance earnings by:

• Calculating the deduction amount of the retirement allowance, taking into account overlapping years of service and retirement due to disability.

• Calculating the retirement allowance income after the deduction by summing the earning amount of the retirement allowance (that you enter through positive input) and the former retirement allowance paid in the same year (as reported on the Maintain Ret Allow Data JPN page) and subtracting the deduction amount of the retirement allowance.

• Calculating the taxable amount of the retirement allowance.

• Determining the income tax on the taxable amount of the retirement allowance, taking into account whether the employee submitted a retirement income report.

  Note:

  The system calculates income tax of zero when the retirement allowance was paid due to death.

• Determines the inhabitant tax based on the retirement allowance income after the deduction.