Define Legal Entities

This topic demonstrates how you can define and set up a legal entity for China.

Setting up a legal entity for China includes defining the following:

• A legal entity

• Legal entity registrations

• Legal entity HCM information

Before You Begin

Before you define a legal entity, you must:

1. (Optional) Define a legislative data group (LDG) for China using the Manage Legislative Data Groups task. For China, when you create the first legal entity using the Manage Legal Entities task, the application automatically creates an LDG named CN Legislative Data Group. After selecting the Payroll statutory unit check box, which designates the legal entity as a PSU, you must manually associate the PSU with the LDG.

2. Use the Manage Legal Addresses task to define a legal address for the legal entity you're about to define.

3. (Optional) Define the required jurisdictions for the legal entity you're about to define.

How to Create a Legal Entity

To create a legal entity:

1. In the Setup and Maintenance work area, go to the following:

   • Offering: Workforce Deployment

   • Functional Area: Legal Structures

   • Task: Define Legal Entities for Human Capital Management

   Expand the task to display a list of related tasks.

2. Click the Select Scope link for the Manage Legal Entity task.

3. On the Select Scope window, select Create New in the Legal Entity field.

4. Click Apply and Go to Task.

5. On the Manage Legal Entities page, click Create.

6. On the Create Legal Entity page, complete these fields, as appropriate, for this entity:

   • In the Country field, select China.

   • In the Name field, enter a name for the legal entity.

   • In the Legal Entity Identifier field, enter the number that uniquely identifies this legal entity. This number is the organization code issued by a government authority.

   • Select the Legal Employer check box.

   • If this legal entity is also a payroll statutory unit (PSU), select the Payroll statutory unit option. If this entity belongs to an existing PSU, select a PSU from the Payroll Statutory Unit field.

   • In the Registration Information section, the identifying jurisdiction is predefined as China Income Tax. From the Legal Address list, select the legal address.

   • In both the Legal Entity Registration Number and Legal Entity Unit Registration Number fields, enter the registration number issued by the State Administration of Taxation.

7. Click Save and Close.

How to Define Legal Entity Registrations

No additional legal entity registration is required for managing Global Payroll for China.

How to Define Legal Entity HCM Information

It's optional to set up additional China-specific legal entity information because this information isn't required to process payroll for China.

To define HCM information for the legal entities you have created:

1. In the Setup and Maintenance work area, go to the following:

   • Offering: Workforce Deployment

   • Functional Area: Legal Structures

   • Task: Define Legal Entities for Human Capital Management

   Expand the task to display a list of related tasks.

2. Click the Select Scope link for the Manage Legal Entity HCM Information task. Set the scope for this task as given in the previous task.

3. Click Go to Task for the Manage Legal Entity HCM Information task.

4. Click Edit, and then select Correct.

6. On the Legal Employer tab, complete the fields in the Work Day Information and Legal Employer Information sections.

7. Click Chinese Legal Employer Details, and then enter the China-specific HCM information. Enterprise Organization Code is the only mandatory field.

8. If this entity is a payroll statutory unit, select the Payroll Statutory Unit tab.

9. Click Payroll Statutory Unit Details.

10. Enter the Fiscal Year Start Date, and select the Associated Legislative Data Group.

    You must associate the legislative data group at the PSU level.

    Note: Once a legislative data group is assigned to a payroll statutory unit, and employees are created under the legal employers linked to the payroll statutory unit, you should not change the legislative data group the unit is associated with.

11. Click Chinese Payroll Statutory Unit Details, and then provide values for Monthly Salary Paid Days and Leave Compensation Factor if you want to override the predefined values.

    Note: Monthly Salary Paid Days is used to derive each employee's daily rate for calculating termination payments. Leave Compensation Factor is used to calculate the leave payments an employee receives on termination for leaves that the employee didn't take.

12. Click Submit.