PeopleSoft Global Payroll for Mexico 9.1 PeopleBook

Defining Taxation

This chapter discusses how to:

Define federal taxes.
Define annual tax adjustments.
Define Multiple Information report parameters.
Define state taxes.
Set up inter-company transfer processing.

Note. An overview of federal, state, and local taxes is discussed in another chapter in this PeopleBook.

See Also

Defining Federal Taxes

Federal tax definition begins on the General Parameters page, where you define the tax method for adjusting federal taxes.

Note. The General Parameters page is discussed in another chapter in this PeopleBook.

Once you've defined federal taxes, you can process federal tax contributions during regular payroll runs and generate a Federal Taxes report at the end of the year.

See Also

Defining General Parameters

Federal Tax Processing

Defining Annual Tax Adjustments

To define annual adjustments, use the Pay Groups MEX (GPMX_PARM_PYGRP) component.

This section provides an overview of the annual tax adjustment setup and discusses how to define annual adjustments.

Understanding Annual Tax Adjustment Setup

Begin defining annual adjustments parameters on the Annual Adjustments page.

Once you've defined annual adjustment parameters, you can update annual tax adjustments by entering tax data from other employers and specify employees who are exempt from the process.

See Also

Updating Annual Tax Adjustments

Page Used to Define Annual Adjustments

Page Name	Definition Name	Navigation	Usage
Annual Adjustment	GPMX_PARM_PAYGRP	Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Framework, Organizational, Pay Groups MEX, Annual Adjustment	Define the parameters to calculate the annual adjustment for each pay group in your company.

Defining Annual Adjustments

Access the Annual Adjustment page (Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Framework, Organizational, Pay Groups MEX, Annual Adjustment).

Deduction Type

Define how the system will handle the annual tax adjustment in case you have a debit at the end of the year. Values are Bracket, Number of Periods, and Single Deduction.

If you select Number of Periods, the system will use the data in the bracket AA BR RNG DES PER in order to determine in how many pay periods the debit will be discounted. For example, if there is a 5000.00 MXN debit, based on the data of the bracket, the system will withhold 1000.00 MXN during five periods.

If you select Bracket, the system will use the data in the bracket AA BR RNG DES SAL in order to determine the amount that needs to be withheld each pay period. The range will depend on the employee's daily rate. For example, if there is a 3000.00 MXN debit, and an employee has a 300.00 MXN daily rate, based on the data of the bracket, the system will withhold 100.00 MXN each pay period until it reaches the 3000.00 MXN amount.

If you select Single Deduction, the system will withhold the complete debit amount in a single pay period. If the net pay is not enough to cover the amount of the deduction, the system will consider the remaining amount as an arrear and it will be deducted in future pay periods.

Calculation Type

Some companies calculate the annual tax adjustment with the method that existed in the year 1991. In this field, you'll specify which method to use when calculating the annual tax adjustment. Values are Both − Current & 1991, Current Method, and Method 1991. Once you've selected the Both − Current & 1991 method, the system then selects the method with the smaller tax.

Payment Type

If you have a tax credit at the end of the year, select one of the options to define how you will receive the credit. Values are Payments vs ISR and Single Payment. Either you'll select to get a payment or you'll have a credit applied to next year's ISR (federal taxes).

If you select Payments vs ISR, it means that you'll get a credit on the regular tax versus the difference until this credit is covered.

For example, let's say that an employee has 2400 MXN worth of taxes deducted for the year (100 MXN each semimonthly payroll). In the annual tax adjustment process, the system calculates that the real annual tax should be 2100 MXN. This means that there's a credit of 300 MXN due to the employee. If you calculate the next regular payroll, the system would ordinarily withhold 100 MXN (the regular tax for the employee's regular earnings). However, the system won't withhold any amount during 3 payroll periods (to make up for the difference between 2100 MXN and 2400 MXN). The system will cover the regular tax deduction with the credit that the employee has until it is covered.

Return Credit

Enter the date when the salary credit annual difference will be paid to the employee.

Defining Multiple Information Report Parameters

To define multiple information report parameters, use the Multiple Info Parameters MEX (GPMX_ANNL) component.

This section provides an overview of the Multiple Information report setup and discusses how to define Multiple Information Report parameters.

Understanding the Multiple Information Report Setup

Starting on January 1, 2004, there is a new statutory requirement to submit the Multiple Information report to the government. With Global Payroll for Mexico, you can comply with this new legal requirement

To create the Multiple Information report:

Define Multiple Information report parameters on the Multiple Info Parameters MEX page.

Before you can generate the Multiple Information report, you need to map corresponding values representing the fields on the report to the payroll elements in Global Payroll for Mexico. You'll map the elements on the Multiple Info Parameters MEX page.
Run the Multiple Information report on the Multiple Information MEX page.

You will generate the Multiple Information report at the end of the year, after having finished the payroll fiscal year. The output will be a flat file that will be loaded up to the SAT (Servicio de Administracíon Tributaria) system.

Note. The Multiple Information report page is discussed in another chapter in this PeopleBook.

See Running Tax Reports.

Page Used to Define Multiple Information Report Parameters

Page Name	Definition Name	Navigation	Usage
Multiple Info. Parameters MEX	GPMX_ANNL	Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Taxes, Multiple Info. Parameters MEX, Multiple Info. Parameters MEX	Define multiple information report parameters for a company.

Defining Multiple Information Report Parameters

Access the Multiple Info. Parameters MEX page (Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Taxes, Multiple Info. Parameters MEX, Multiple Info. Parameters MEX).

Element Mapping

Report Field	Select the field on the Multiple Information report to which the element will be mapped.
Entry Type	Define the entry type for the element. Values are Accumulator, Deduction, and Earnings.
Element Name	Select the element which will map to the Multiple Information report.

Other Income

Other Income field values are for any other earnings or deduction that don't have a specific row defined in the Element Mapping section.

Entry Type	Define the entry type for the element. Values are Deduction and Earnings.
Field Type	Select Taxable or NonTaxable for the earnings or deduction entry type.
Element Name	Select the element which will map to the Multiple Information report.

Defining State Taxes

To define earnings and deductions by state, use the Earn/Ded by State MEX (GPMX_STATE_TAXES) component. To define state and local taxes for a company, use the State Rates by Company MEX (GPMX_SP_ST_TAXES) component.

This section provides an overview of state tax setup and discusses how to:

Define earnings and deductions by state.
Define state tax rates by company.

Understanding State Tax Setup

To define state taxes, you need to define earnings and deductions by state, state tax rates, and state tax rates by company.

Once you've defined state taxes, you can process state tax contributions during regular payroll runs and generate the State Taxes by Location report every month.

See Also

State Tax Processing

Pages Used to Define State Taxes

Page Name	Definition Name	Navigation	Usage
Earn/Dedn by State MEX	GPMX_STATE_TAXES	Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Taxes, Earn/Dedn by State MEX, Earn/Dedn by State MEX	Define which earnings and deductions will be part of a state's tax base.
State Rates by Company MEX	GPMX_SPST_TAXES	Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Taxes, State Rates by Company MEX, State Rates by Company MEX	Define state and local taxes at the company level. This only applies to companies operating in Chihuahua and/or Ciudad Juarez.

Defining Earnings and Deductions by State

Access the Earn/Dedn by State MEX (earnings and deductions by state MEX) page (Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Taxes, Earn/Dedn by State MEX, Earn/Dedn by State MEX).

Element Type

Select the element type. Values are Deduction and Earnings.

Element Name

Select the earning or deduction element to be added to the state tax base.

Note. This data is loaded into the payroll process with the IE AR ST TAX CNCPT array.

Defining State Tax Rates by Company

Access the State Rates by Company MEX page (Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Taxes, State Rates by Company MEX, State Rates by Company MEX).

State/County

Select Chihuahua, Ciudad Juarez, or Hidalgo.

Special Tax Percent

Enter the state tax rate for your company.

Note. Chihuahua is the only state in Mexico that taxes a company's earnings based on the number of employees it has, so the state tax rates vary for each company.

It's difficult to determine the number of employees in a company before the payroll process, so you must determine the number of employees in your company and then the corresponding tax rates for your company individually.

You'll also define local tax rates for Ciudad Juarez on this page. The local tax rate varies depending on the amount of minimum wages of the entire payroll earnings in a month. This information can also be difficult to determine prior to running a payroll. Therefore, you can load this data into the payroll process with the IE AR ES CIA array.

Setting Up Inter-Company Transfer Processing

This section provides an overview of inter-company transfer processing and discusses how to:

Define action reasons for inter-company transfers.
Map elements for inter-company transfers.

See Also

Processing Inter-Company Transfers

Understanding Inter-Company Transfer Processing

The government requires that companies report employee's income from former and current employers separately on Form 37—the annual earnings and deductions legal report. This applies to employees who change jobs between unaffiliated companies as well as to employees who transfer from one internal company to another. Global Payroll for Mexico provides functionality to meet the Form 37 tax reporting requirements for inter-company transfers where the internal companies have a different employer RFC within the system. Use this feature to maintain the accumulators, earnings, and deductions for employees when the employees do inter-company transfers. After processing the data, you can generate the Form 37 report with separate company reporting data for employees with inter-company transfers.

Inter-Company Transfer Process

The Inter-Company Transfer feature centers around the Inter-Company Transfer Application engine process (GPMX_INTERC). The Inter-Company Transfer process:

Identifies which employees have qualifying inter-company transfers to process.
Confirms that the last payroll that includes the transferring employee is finalized.
Loads the specified earnings, deduction, and accumulator elements of the former company and their values based on the values last calculated by the payroll engine.
Inserts the specified elements and their values into the Define Prior Employer Data MEX page as former employer data.
Updates the values of the specified elements of the former company to zero.

Steps to Process Inter-Company Transfers

To process inter-company transfers:

Define the accumulators, earnings, and deductions to transfer from the former company to new company on the Inter-Company Parameters MEX page.
Define the action and reason code combinations that qualify for inter-company transfer processing by selecting the Inter-Company Transfer check box on the Action Reason page of HR.
Use the Job Data component in HR to add a new Job record on the Job Data component for the employee with: (a) an action and reason code combination that is set up for inter-company transfers, and (b) an updated Company field value for another internal company.

Whenever you enter a new row of job data for an employee in the Job Data component and the specified action and reason code combination is set up for inter-company transfers, the system sends the data from HR to Global Payroll for Mexico via the WORKFORCE_SYNC service operation in Integration Broker. The system transfers this data only when the action and reason code combination is set up for inter-company transfers and the Global Payroll for Mexico country extension is selected on the Installation Table page.
Verify that the system successfully transmitted the inter-company transfer data from HR to Global Payroll for Mexico for the employee on the Inter-Company Payee Detail MEX page.

The system loads data for the inter-company transfers into this table. If you do not see the employee in this table, the system has not transmitted the HR data. Verify that you have selected Global Payroll for Mexico on the Installation Table page, set up the action and reason code combination for inter-company transfers on the Action Reason page, entered correctly the job data for the employee's inter-company transfer on the Job Data component, and enabled PeopleTools Integration Broker to send the WORKFORCE_SYNC service operation.
Verify that the last payroll of the transferring employee is finalized through the Results By calendar Group component.

Within the same component, also note the calculated results for the earnings, deductions, and accumulators that you specified on the Inter-Company Transfer Mapping page.
Run the Inter-Company Transfer process on the Inter-Company Transfer MEX run control page to process the data for inter-company transfers.

Select to either adjust accumulator balances or undo processing. The process includes only the employees who are in the specified calendar group and pay group, who have a new Job record with a qualifying action and reason code combination for inter-company transfers, and who has their last payroll finalized.
Verify that the process updated the employee's inter-company transfer data on the Inter-Company Payee Detail MEX page.
Verify that the specified accumulators adjusted appropriately for the old company on the Adjust Accumulator Balance page by accessing the employee's data for the calendar involved in the inter-company transfer processing.

If you ran the process to adjust accumulator balances, the accumulators adjust to zero. If you ran the process to undo processing, the accumulators adjust to their original values.
Verify that the accumulators that you defined as part of the inter-company transfer mapping appear as former employer data for the employee on the Define Prior Employer Data MEX page.

The accumulator values should match the values from the last payroll run. If you ran the process to undo processing, the accumulator data for the employee is deleted from this page only.

Pages Used to Set Up Inter-Company Transfer Processing

Page Name	Definition Name	Navigation	Usage
Action Reasons	ACTION_REASON_TBL	Set Up HRMS, Product Related, Workforce Administration, Action Reasons	Define or modify personnel action reasons.
Inter-Company Parameters MEX	GPMX_INTERCOM_PARM	Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Taxes, Inter-company Parameters MEX, Inter-company Parameters MEX	Define which accumulators, earnings, and deduction elements from the prior company to carry over to the new company for employees with inter-company transfers. The Inter-Company Transfer process uses these mappings to move the employee's finalized payroll values for these elements between internal companies.

Defining Action Reasons for Inter-Company Transfers

Use the Inter-Copmany Transfer check box on the Action Reason page (Set Up HRMS, Product Related, Workforce Administration, Action Reasons) in HR to indicate the action and reason code combinations that are valid for processing inter-company transfers within Global payroll for Mexico. To access the page, select Set Up HRMS, Product Related, Workforce Administration, Action Reasons.

See Defining Personnel Actions and Reasons.

Mapping Elements for Inter-Company Transfers

Access the Inter-Company Parameters MEX page (Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Taxes, Inter-Company Parameters MEX, Inter-Company Parameters MEX).

Effective Date

Enter the effective date on which the element mapping for inter-company transfers becomes valid.

Entry Type

Select the type of element that you are mapping from one company to another for inter-company transfers. This element mapping definition is used to insert specified earnings, deduction, and accumulator elements into the Define Prior Employer Data MEX page as former employer data. Your choices are Earnings, Deduction, or Accumulator.

Element Name and Description

Select the element that you are mapping from one company to another for inter-company transfers. The system prompts you to select from elements based on the specified entry type.

Earning/Deduction Code

Select the earning or deduction code to which you are mapping the specified element to prior employer data. The Inter-Company Transfer process uses this mapping of accumulators to earning/deduction codes to populate the Define Prior Employer Data MEX page with the employee's accumulator values from the former company.

Deduction Type	Define how the system will handle the annual tax adjustment in case you have a debit at the end of the year. Values are Bracket, Number of Periods, and Single Deduction. If you select Number of Periods, the system will use the data in the bracket AA BR RNG DES PER in order to determine in how many pay periods the debit will be discounted. For example, if there is a 5000.00 MXN debit, based on the data of the bracket, the system will withhold 1000.00 MXN during five periods. If you select Bracket, the system will use the data in the bracket AA BR RNG DES SAL in order to determine the amount that needs to be withheld each pay period. The range will depend on the employee's daily rate. For example, if there is a 3000.00 MXN debit, and an employee has a 300.00 MXN daily rate, based on the data of the bracket, the system will withhold 100.00 MXN each pay period until it reaches the 3000.00 MXN amount. If you select Single Deduction, the system will withhold the complete debit amount in a single pay period. If the net pay is not enough to cover the amount of the deduction, the system will consider the remaining amount as an arrear and it will be deducted in future pay periods.
Calculation Type	Some companies calculate the annual tax adjustment with the method that existed in the year 1991. In this field, you'll specify which method to use when calculating the annual tax adjustment. Values are Both − Current & 1991, Current Method, and Method 1991. Once you've selected the Both − Current & 1991 method, the system then selects the method with the smaller tax.
Payment Type	If you have a tax credit at the end of the year, select one of the options to define how you will receive the credit. Values are Payments vs ISR and Single Payment. Either you'll select to get a payment or you'll have a credit applied to next year's ISR (federal taxes). If you select Payments vs ISR, it means that you'll get a credit on the regular tax versus the difference until this credit is covered. For example, let's say that an employee has 2400 MXN worth of taxes deducted for the year (100 MXN each semimonthly payroll). In the annual tax adjustment process, the system calculates that the real annual tax should be 2100 MXN. This means that there's a credit of 300 MXN due to the employee. If you calculate the next regular payroll, the system would ordinarily withhold 100 MXN (the regular tax for the employee's regular earnings). However, the system won't withhold any amount during 3 payroll periods (to make up for the difference between 2100 MXN and 2400 MXN). The system will cover the regular tax deduction with the credit that the employee has until it is covered.
Return Credit	Enter the date when the salary credit annual difference will be paid to the employee.

State/County	Select Chihuahua, Ciudad Juarez, or Hidalgo.
Special Tax Percent	Enter the state tax rate for your company.

Effective Date	Enter the effective date on which the element mapping for inter-company transfers becomes valid.
Entry Type	Select the type of element that you are mapping from one company to another for inter-company transfers. This element mapping definition is used to insert specified earnings, deduction, and accumulator elements into the Define Prior Employer Data MEX page as former employer data. Your choices are Earnings, Deduction, or Accumulator.
Element Name and Description	Select the element that you are mapping from one company to another for inter-company transfers. The system prompts you to select from elements based on the specified entry type.
Earning/Deduction Code	Select the earning or deduction code to which you are mapping the specified element to prior employer data. The Inter-Company Transfer process uses this mapping of accumulators to earning/deduction codes to populate the Define Prior Employer Data MEX page with the employee's accumulator values from the former company.