Selecting Precision Settings - Japan

You can select the level of tax rounding precision at the company level, or set it for each customer or vendor individually.

On the Set Up Taxes page, if the Allow override rounding setting per Entity box is not checked, tax amounts will follow the tax rounding method and precision defined for the country nexus, no matter what tax rounding method and precision have been set for customers and vendors. If tax rounding preferences are not defined on the entity record, the system uses the preferences defined for the country nexus.

You must enter the gross amount first, to get the correct tax calculation logic. Then, set the tax rounding method. The selected rounding method is applied to all amounts, the inputs and output. Because of the rounding method, the tax amount based on net amount will differ with that based on gross amount.

Examples of Rounding Precision Settings

The following examples show the application of tax rounding precision and the corresponding computation.

If,

Tax Rounding Precision = 1 and below;

Tax Rounding Method = Round Down; and

Tax Rate = 8%.

Then, with net amount as source: 95 * 1.08 = 102.6 ; rounded down to 102.

The tax amount is calculated as 102 - 95 = 7.

And, with gross amount as source: 102 / 1.08 = 94.4444... ; rounded down to 94.

The tax amount is calculated as 102 - 94 = 8.

The following table shows another example of the consumption tax amount corresponding to the rounding precision selected if the rounding method selected is round down.

If an item is priced at ¥73,489, the consumption tax on the item is ¥3674.45.

Rounding Precision

Consumption Tax Amount

1 and Below

¥3,674

10 and Below

¥3,670

100 and Below

¥3,600

Related Topics

Setting Tax Rounding Methods - Japan
Setting Tax Rounding Preferences for a Customer or Vendor - Japan
Consumption Tax Overview - Japan
Setting Up Consumption Tax - Japan
Japan Consumption Tax Form
Deductible Purchase Tax for Japan
Japan Consumption Tax Reports
Tax Accounting Overview
Enabling and Setting Up Taxation Features
Advanced Taxes

General Notices