Introduction

Setting up an enterprise structure for China involves the following tasks:

1. Defining a legislative data group

2. Defining legal jurisdictions

3. Defining legal authorities

4. Defining legal addresses

5. Defining legal entities

6. Defining legal reporting units and tax reporting units

You can perform all setup tasks under Workforce Deployment offering in the Setup and Maintenance work area. China supports all the organization models. These are the key points you must consider as you create and set up Chinese enterprise structures.

Legislative Data Groups

Legislative data groups (LDG) are a means of partitioning payroll and related data. At least one legislative data group is required for each country or territory where an enterprise operates. Each legislative data group is associated with one or more payroll statutory units. Each payroll statutory unit can belong to only one legislative data group. When you create the first legal entity in a country or territory, the application automatically creates a LDG with ISO two letter country code plus Legislative Data Group. For example, when you create your first legal entity in China and if no LDG exists for China, then the application creates a LDG - CN Legislative Data Group.

Use the Manage Legislative Data Groups task to create a legislative data group. Set the Country to China and the Currency to Yuan Renminbi. Complete other fields as appropriate for your implementation.

Legal Jurisdictions

A jurisdiction is a physical territory, such as a group of countries, country, province, city or county, where a particular piece of legislation applies. For example, The Beijing Social Insurance is a social insurance legislation that applies to organizations operating in the Beijing City. To do business in China or in a territory within a China, you must register with an identifying jurisdiction - China Income Tax. This manages all individual income tax, public housing fund, and social insurances locally. To ensure that all deduction calculations and reporting are accurate, manage statutory deductions and jurisdiction information.

Use the Manage Legal Jurisdictions task to create jurisdictions.

Legal Authorities

A legal authority is a government or legal body. A legal authority is charged with powers to make laws, levy and collect fees and taxes, and remit financial appropriations for a given jurisdiction. It's optional to define legal authorities for China.

Use the Manage Legal Authorities task to create legal authorities. For each authority you create, set the Tax Authority Type to Collecting and reporting.

Legal Addresses

A legal address is the mailing address of a legal entity or legal authority. You use legal addresses when you send correspondence such as invoices, bills, reports, and so on, to a legal entity or authority. A legal address is also the address a legal entity uses to register with a legal authority. You must create legal addresses before creating legal entities.

Use the Manage Legal Address task to create legal addresses. For each address you create, select China as the country so that the Chinese address style will be used.

Legal Entities, Legal Employers, and Payroll Statutory Units

A legal entity is an entity unequivocally identified and given rights and responsibilities under Commercial Law, through registration with the territory's appropriate authority. Legal entities consist of:

• Legal employer: A legal employer is a legal entity that employs workers. The legal employer is captured at the work relationship level, and all assignments within that relationship are automatically with that legal employer. Legal employer information for worker assignments is also used for reporting purposes.

• Payroll statutory unit (PSU): Payroll statutory unit is a legal entity that's responsible for paying workers, including the payment of payroll tax and social insurance. A payroll statutory unit can pay and report on payroll tax and social insurance on behalf of one or many legal entities, depending on the structure of your enterprise. For example, if you're a multinational, multiple company enterprise, then you register a payroll statutory unit in each country where you employ and pay people. In China, you select one legal entity as a payroll statutory unit and map the rest of the legal entities to this payroll statutory unit as parent payroll statutory unit. In China, it's recommended to have only one PSU under an LDG. And have multiple legal entities attached to this legislative data group (LDG).

Legal Reporting Units and Tax Reporting Units

A legal reporting unit (LRU) is the lowest level component of a legal structure that requires registrations. It's used to group workers for the purpose of tax and social insurance reporting or to represent a part of your enterprise with a specific statutory or tax reporting obligation. A LRU is created automatically when you create a PSU. If an LRU is used in Oracle Fusion Payroll for tax reporting purposes, then it must be designated as a tax reporting unit (TRU) using the Manage Legal Reporting Unit HCM Information task. Use a tax reporting unit to group workers for the purpose of tax and social insurance reporting.