Example of Setting Up a Calculation Card for Statutory Deductions for China

Let's look at an example that shows how to create calculation components, component details, and association information for a new employee using the Manage Calculation Cards task.

This example assumes that you created a Deduction Information calculation card automatically during the new hire process (or manually).

The employee in this example works in Beijing and contributes individual income tax through the main tax reporting unit (TRU) in Beijing. However, the employee wants to contribute basic pension and basic medical insurance at the hukou location of Shanghai. This employee also qualifies for a special tax reduction rate.

Before You Start

1. Define all legal entities and related information, including payroll statutory units (PSUs), legal employers, TRUs, and registration information.

2. Define element eligibility for the Aggregation Information element.

3. Complete the new hire process for the employee, and ensure that the employee has a valid payroll relationship with a Chinese payroll statutory unit under the payroll relationship. The new hire process should have created a Deductions Information calculation card for the new hire automatically.

This table summarizes the key decisions you need to consider.

Key Decisions	In This Example
What deductions will this employee take?	Individual income tax, basic medical insurance, and basic pension insurance
Does this employee have a foreigner code?	No
Does this employee qualify for a special tax exemption rate?	Yes, the employee qualifies for a 20% tax reduction rate
Is the employee's contribution area the same for all deductions?	No, individual income tax contribution is made through one TRU, while the basic pension and basic medical contributions are made through another TRU

Open the Calculation Card

1. From your Home page, navigate to My Client Groups > Show More > Payroll.

2. Under Person Management, click Calculation Cards.

3. On the Search Person page, search for the person, and from the Actions menu, select Calculation Cards.

4. On the Calculation Cards page, select a Deduction Information from the Calculation Card drop-down list.

5. Enter a date in the Effective As-of Date field and click Search.

   The Calculation Cards: Deduction Information page appears, and the Calculation Card Overview panel shows the component groups available for this calculation card.

Add an Individual Income Tax Component for a Special Tax Reduction Rate

1. In the Calculation Card Overview panel, select Taxes.

2. Click Create in the Calculation Components section.

3. Select Individual Income Tax from the Calculation Component field, and click OK. A new component appears in the Calculation Components section.

4. Expand the Individual Income Tax Details section, and enter these values:

   Field	Value
   Entitled to Tax Reduction or Exemption	Yes
   Tax Exemption Amount Category	Mainland China resident with mainland China income

5. Click the Enterable Calculation Values on Calculation Card tab.

6. Click Create and do the following:

   • Enter these values to define a special tax reduction of 20 percent:

     Field	Value
     Name	Special Tax Reduction rate
     Rate	0.2

   • Enter these values to define a fixed special tax reduction amount of 420 for Shanghai:

     Field	Value
     Name	Fixed Special Tax Reduction Amount
     Amount	420 (for Shanghai)

   Note: In cases where both the special tax reduction rate and fixed special tax reduction amount are defined, the fixed special tax reduction amount takes precedence over the special tax reduction rate.

7. Click OK.

Add Social Security Components

1. In the Calculation Card Overview panel, select Social Security.

2. Click Create in the Calculation Components section.

3. Select Basic Medical Insurance from the Calculation Component field, and click OK.

   A new component appears in the Calculation Components section.

4. Expand the Basic Medical Insurance Details section, and enter these values:

   Field	Value
   Account Number	1000100
   Account Status	Open
   Force Contribution Base Recalculation	No (Since this is the first time you're calculating the deduction, you don't need to force recalculation.)

   Note: The Employee and Employer Contribution Base Calculation Method fields are optional. Only provide values for these fields if the calculation methods for this person differ from the default methods defined for the PSU on the PSU-level calculation card.

5. Click Create in the Calculation Components section to create another component.

6. Select Basic Pension Insurance in the Calculation Component field, and click OK.

7. Expand the Basic Pension Insurance Details section, and enter BPI44151 in the Account Number field.

8. For all other fields, use the values from the previous table.

   Note: You can repeat this process as needed to add components for Public Housing Fund (PHF), Supplementary Medical Insurance, Unemployment Insurance, Maternity Insurance, and Work-Related Insurance. For Enterprise Annuity or other benefits deductions, click Benefits in the Calculation Card Overview pane, and then follow the earlier steps to create components and component details. You can also create overrides for social security and benefits deductions if, for example, you need to enter an employee-specific contribution rate or amount that differs from the value defined on a calculation card at the TRU or PSU level.

Define TRU Associations

If you select a TRU during the new hire process, an association to that TRU is added to the card automatically. If you don't select a TRU, you must create the association manually.

In this example, no TRU was specified during the new hire process. The employee wants to make tax payments in Beijing and social insurance contributions in Shanghai, so you must create these TRU associations:

1. Select Associations in the Calculation Card Overview panel.

2. Click Create in the Associations section, and enter these values:

   Field	Value
   Tax Reporting Unit	Beijing-TRU
   Calculation Component	Leave this blank to associate all components with the main tax reporting unit by default

3. Click Create in the Associations section, and enter the following values:

   Field	Value
   Tax Reporting Unit	Shanghai-TRU
   Calculation Component	Basic Medical Insurance

4. Click Create in the Associations section, and enter these values:

   Field	Value
   Tax Reporting Unit	Shanghai-TRU
   Calculation Component	Basic Pension Insurance

5. Click Save.

Define Association Details

Association details associate the Aggregation Information calculation component with an assignment in a employment model. If you select a TRU during the new hire process, the process automatically associates the Aggregation Information component with the employment term (or assignment) created for the employee. If you don't select a TRU , you must define the association details manually:

1. In the Associations section, select the association for the Beijing-TRU (the main association) and then click Create in the Association Details section.

2. Enter these values:

   Field	Value
   Employment Term Number	ET102202
   Calculation Component	Aggregation Information

   Note: If the employer uses an employment model, you need to associate the component with an assignment rather than employment term.

3. Click Save and Close.