Create a Legal Entity Calculation Card for Mexico

This topic demonstrates how you can create a calculation card at the legal entity level. The calculation card captures information for the organization at the legislative level, you can override this information at the tax reporting unit (TRU) level.

Use the Legal Entity Deduction records task to create the card at the payroll statutory unit (PSU) level. If you need overrides at the TRU level, the same steps apply but you use the Legal Reporting unit Calculation Cards task instead.

A legal entity organization card captures the ISR tax and social security specific to your organization. It also enables you to specify the relevant employer state tax information. On the legal entity organization card, on the Calculation Cards tab, in the Enterable Calculation Values, when you enter values, they replace the values defined at the legislative level.

Perform these tasks to create a legal entity calculation card:

• Create the Calculation Card

• Define the Tax Calculation Components

• Define the Social Security Calculation Components

• Define the Loans Calculation Components

Create the Calculation Card

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

   • Offering: Workforce Deployment

   • Functional Area: Legal Structures

   • Task: Define Legal Entities for Human Capital Management

   Expand the entry to display a list of related tasks.

2. Click the Select link for the Legal Entity Calculation Cards task.

3. On the Select Scope window, select Select and Add from the Legal Entity list.

4. Click Apply and Go to Task.

5. On the Select and Add: Legal Entity page, search for and select the legal entity and click Save and Close.

6. Click Go to Task for the Legal Entity Calculation Cards task.

7. Click Create.

8. On the Create Calculation Card dialog box, do these steps:

   • In the Effective As-of Date field, enter a date.

   • From the Name list, select Organization Card.

9. Click Continue.

Define the Tax Calculation Components

1. From the Components Groups in the Calculation Card Overview section, select Taxes.

2. In the Calculation Components section, click Create and from the components list, select Employer ISR Tax.

3. Click OK.

4. In the Employer ISR Tax: Details section, on the Enterable Calculation Values, on the Calculation Cards tab, click Create.

5. Select the name of the override you want to create and then enter the overriding value. This table lists the overrides allowed for federal income tax management at the payroll statutory unit (PSU) level.

   OVERRIDE NAME	DESCRIPTION	VALUE TYPE	VALUE EXAMPLE
   Average Days Per Month	The average number of days in a month.	Total Amount	20
   Average Days Per Year	The average number of days in a year.	Total Amount	360
   ISR Severance Rule	Determines which Severance ISR tax calculation method to use. The default is Subject Earnings Greater Than or Equal to Monthly Salary. This means that it uses the Severance tax calculation method if the Severance ISR Subject portion is greater than or equal to the Monthly Salary. If you select None, it uses the severance ISR calculation method with no comparison and regardless of the severance amount. If you choose Total Earnings Greater Than or Equal to Monthly Salary, it uses the severance tax calculation method if the total severance payment (subject plus exempt portions) is greater than or equal to the monthly salary.	String	Subject Earnings Greater Than or Equal to Monthly Salary
   ISR Subsidy Adjustment on Regular Run Type	For each payroll run, the standard ISR calculation adjusts the amount of subsidy for employment to prevent exceeding the monthly cap. This adjustment compares the month-to-date (MTD) subject earnings balance with the prorated monthly subsidy for employment rates. This override determines if it adjusts the ISR Subsidy for Employment during a Regular payroll run type. The application calculates subsidy for employment (adjusted or not) based on the rates determined by the existing ISR Subsidy Proration on Payroll Run Type override. The default is Yes, where the Subsidy for employment is adjusted based on the MTD ISR subject earnings balance. If you select No, it calculates the Subsidy for employment with no adjustment considering the current processing pay period ISR subject earnings (Run balance).	String	Yes
   ISR Subsidy Proration on Payroll Run Type	This override determines if the application calculates ISR Subsidy for Employment based on the periods in the month and on proration of the monthly Subsidy for Employment rates. The Subsidy for Employment calculation basis is the MTD ISR subject earnings balance in all scenarios, except if you set the ISR Subsidy for employment Adjustment on Regular payroll run override to No. In this case, the basis is the Run balance. The payroll run types excluded by this value definition use a Subsidy for Employment rates factor of one (no proration). This means that the application uses full monthly rates to calculate the Subsidy for Employment. The default is Regular and Monthly Tax Adjustment (Default). This means that it applies Subsidy for Employment Proration to both payroll run types: Monthly Tax Adjustment and Regular. For None, it doesn't apply any Subsidy for Employment proration (factor 1) to both payroll run types, Monthly Tax Adjustment and Regular. If you select Regular, it applies proration only to the Regular run type. The Monthly Tax Adjustment run type uses a Subsidy for Employment proration factor of one. If you select the Monthly Tax Adjustment, it applies proration only to the Monthly Tax Adjustment run type. Regular run type uses a Subsidy for Employment proration factor of one.	String	Monthly Tax Adjustment
   ISR Tax Calculation	This override determines if the application calculates ISR tax. The default value is Yes. Note: Note: If you set this override to No, it takes precedence over all other Employee ISR Tax component overrides.	String	Yes
   ISR Tax Proration on Monthly Tax Adjustment Run Type	The standard Monthly Tax Adjustment ISR tax calculation procedure calculates the tax rates based on a factor derived from the periods the employee has worked in the month. This override applies only to the Monthly Tax Adjustment payroll run type and determines to calculate the tax based on the periods in the month. The tax calculation basis is the month-to-date (MTD) ISR subject earnings balance. The default is Yes. This means that the ISR tax calculation determines the tax rates based on a factor derived from the periods the employee has worked in the month. If you select No, the ISR Tax rates are applied with a factor of one (no proration), regardless of the period when the Monthly Tax Adjustment run type is processed nor the employee hire date.	String	Yes
   Pay Subsidy for Employment on Payroll Run Type	When an employee has two or more employers, they must select which employer pays the subsidy for employment in the ISR tax calculation. The options to determine when the subsidy is calculated include: Monthly Tax Adjustment The subsidy for employment is calculated only for the monthly tax adjustment run type. None The subsidy for employment is never calculated. Regular The subsidy for employment is calculated only for the regular run type. Regular and Monthly Tax Adjustment (default) The subsidy for employment is calculated only for both regular and monthly tax adjustment run types.	String	Regular
   Social Security Exempt	Determines whether to calculate the Social Security Quota liabilities for the employees in this organization.	String	No
   State Tax Exempt	Some companies or government agencies aren't required to pay the employer state tax. Select Yes to exclude this employee from the state tax calculation. The default value for this field is No.	String	No

6. Click Save.

Define the Social Security Calculation Components

1. Select Social Security from the Components Groups in the Calculation Card Overview section.

2. Click Create in the Calculation Components section and select Employer Social Security from the components list.

3. Click OK.

4. In the Employer Social Security: Details section, on the Enterable Calculation Values on the Calculation Cards tab, click Create.

5. Select the name of the override you want to create and then enter the overriding value. This table lists the overrides allowed for federal income tax management at the payroll statutory unit level.

   OVERRIDE NAME	DESCRIPTION	VALUE TYPE	VALUE EXAMPLE
   Additional Quota	The percentage of the Additional Quota.	Rate	N/A
   Additional Quota Exempt	Employee's exemption to Additional Quota.	String	Yes
   Benefits in Cash	The percentage of the Benefits in Cash.	Rate	N/A
   Benefits in Cash Exception	Employee's exemption to Benefits In Cash.	String	N/A
   Day Care Centers	The percentage of the Day Care Centers.	Rate	N/A
   Day Care Centers Exemption	Employee's exemption to Day Care Centers.	String	N/A
   Disability and Death	The percentage of the Disability and Death.	Rate	N/A
   Disability and Death Exemption	Employee's exemption to Disability and Death.	String	N/A
   Economic Zone	Mexico is divided into two economic zones (A and B) and each of them has a minimum wage rate. The Social Security calculation uses the organization's economic zone to derive the minimum wage rate to determine if the employer Social Security liability is paid by the employer.	String	N/A
   Employer Paying Employee Liability in case earning is less than Minimum Wage	Used to determine whether the employer pays the social security liability. If the employer SDI is equal or less than the minimum wage assigned to the TRU where the employer is associated, the employer should pay the employer's social security liability.	String	N/A
   Fixed Quota	The percentage of the Fixed Quota.	Rate	N/A
   Fixed Quota Exempt	Employee's exemption to Fixed Quota.	String	N/A
   INFONAVIT Exempt	Employer's exemption to INFONAVIT.	String	N/A
   Pensions and Beneficiaries	The percentage of the Pensions And Beneficiaries.	Rate	N/A
   Pensions And Beneficiaries Exempt	Employee's exemption to Pensions And Beneficiaries.	String	N/A
   Retirement	The percentage of the retirement.	Rate	N/A
   Retirement Exemption	Employee's exemption to retirement.	String	N/A
   Social Security Leaving Reason	Records the social security leaving reason when an employee transfers from one tax reporting unit to another.	String	N/A
   Social Security System	This value definition is reserved.		N/A
   Suspension in Age Outpost	The percentage of the Suspension in Age Outpost.	Rate	N/A
   Suspension in Age Outpost Exemption	Employee's exemption to Suspension in Age Outpost.	String	N/A
   Work Risk Incident Exempt	Indicates if the organization's employees are exempt from the calculation of the Work Risk Incident.	String	N/A
   Work Risk Incident Premium	The percentage to use in the calculation of the Work Risk Incident Premium.	Rate	N/A

6. Click Save.

7. Click Create in the Calculation Components section and select SDI Calculation from the components list.

8. Click Ok.

9. In the SDI Calculation: Details section, on the Enterable Calculation Values on Calculation Cards tab, click Create. Select the name of the override you want to create and then enter the overriding value. This table lists the overrides allowed for federal income tax management at the payroll statutory unit level.

   OVERRIDE NAME	DESCRIPTION	VALUE TYPE	VALUE EXAMPLE
   Annual pay period unit	Employee's unit of the annual pay period.	Total amount	N/A
   Number of biweekly periods in the year	Number of biweekly periods in the year, which triggers the employee's SDI calculation.	Total amount	N/A
   Number of days in the year	Employee's number of days in the year.	Total amount	N/A
   Number of hours in the year	Employee's number of hours in the year.	Total amount	N/A
   Number of months in the year	Employee's number of months in the year.	Total amount	N/A
   Number of semimonthly periods in the year	Employee's number of semi-monthly periods in the year.	Total amount	N/A
   Number of ten-days periods in the year	Employee's number of ten-day periods in the year.	Total amount	N/A
   Number of weeks in the year	Employees number of weeks in the year.	Total amount	N/A

10. Click Save.

Define the Loans Calculation Components

1. Select Loans from the Components Groups in the Calculation Card Overview section.

2. Click Create in the Calculation Components section and select Employer INFONAVIT from the components list.

3. Click Ok.

4. In the Employer INFONAVIT: Details section, on the Enterable Calculation Values on Calculation Cards tab, click Create.

5. Select the name of the override you want to create and then enter the overriding value. This table lists the overrides allowed for federal income tax management at the payroll statutory unit level.

   OVERRIDE NAME	DESCRIPTION	VALUE TYPE	VALUE EXAMPLE
   Use SDI Cap	Indicates if the 25 Times UMA Cap is used or not to compute the INFONAVIT loan. It's applicable depending on the Credit Type.	String	No

6. Click Save.