1. Implementing Payroll for Mexico
  2. Define Enterprise Structures for Mexico

Define Enterprise Structures for Mexico

Before you can hire a worker or run any country-specific process, you must ensure that the organization structures required for the management of HR processes are set up.

A typical enterprise structure setup includes these tasks:

  • Define a legislative data group

  • Define legal jurisdictions

  • Define legal authorities

  • Define legal addresses

  • Define legal entities, legal employers, and payroll statutory units

  • Define legal entity registrations

You can perform all setup tasks under Workforce Deployment offering in the Setup and Maintenance work area. Mexico supports all the organization models. Consider these key points when you create and set up Mexican enterprise structures.

Legislative Data Groups

A legislative data group (LDG) defines the payroll and related data partition context. Create at least one LDG for each country where an enterprise operates.

Use the Legislative Data Groups task to create a Mexican LDG. Set the Country to Mexico and the Currency to Mexican Peso. Select a Cost Allocation Structure appropriate for your implementation.

Legal Jurisdictions

Set up jurisdictions before you create registrations. Mexico has federal and state levels of jurisdictions. Set up the jurisdictions, and define the registrations and legal categories.

Oracle Fusion HCM for Mexico provides three predefined jurisdictions: Mexico Federal Tax, Mexico Social Insurance, and State Income Tax for each of the 32 Mexican states. The Mexico Federal Tax is defined as the identifying jurisdiction. You can use the Legal Jurisdictions task to create legal jurisdictions, but it's not required for you to create additional jurisdictions.

The legislative categories required for the Mexican jurisdictions are Federal Tax, Income Tax and Social Insurance. These categories are predefined in the application.

Legal Authorities

A legal authority is a government or legal body. They're charged with powers to make laws, levy and collect fees and taxes, and remit financial appropriations for a given jurisdiction. You must create these legal authorities for Mexico:

  • Tributary Administration System (SAT), the Mexico Federal Tax Office, at the Payroll Statutory Unit (PSU) level.

  • The Mexico Social Insurance Office at the Tax Reporting Unit (TRU) level.

  • IMSS, the Mexican social security agency that oversees social security, pensions, and public health in Mexico for nongovernmental workers.

  • ISSTE, the Mexican social security agency that oversees social security, pensions, and public health in Mexico for government workers.

Use the Legal Authorities task to create legal authorities.

Legal Addresses

A legal address is the address of record for an entity. For example, the legal address of a legal authority is used in communications with that authority. No legal addresses are predefined for Mexico. You must create legal addresses for all organizational units of the enterprise. You must create legal addresses before creating legal entities.

Use the Legal Addresses task to create legal addresses. For each address you create, select Mexico as the country so that the Mexican address style is used.

Legal Entities, Legal Employers, and Payroll Statutory Units

Once you have completed the tasks mentioned above, you can create legal entities. When defining a legal entity, consider the context in which a legal entity is to be used:

  • Define a legal entity that's both a legal employer and a payroll statutory unit (PSU). This ensures that it shares the legal responsibilities of employment and payroll calculations and reporting.

  • In Mexico, there's a one to one relationship between a Legal Employer and a PSU. So, a legal entity that's designated as a legal employer should also be a PSU.

  • Taxation and profit sharing is calculated and reported at the PSU level. Social insurance is calculated and reported at the tax reporting unit (TRU) level.

  • If multiple legal employers must be grouped together for tax reporting purposes, you can associate all of them with a single PSU. If legal employers don't report together, they must not share a PSU.

  • Every legal employer under a single PSU must be configured similarly. All of them should be configured to either a two-tier employment model or a three-tier employment model.

No legal entities are predefined for Mexico. You must create all legal entities that apply to the enterprise you're setting up. Use the Legal Entity task to create legal entities.

Legal Entity Registrations

A registration is automatically created with the identifying jurisdiction you select when you create a legal entity. If the legal entity has to interact with other legal authorities, you must create additional registrations as appropriate.

You must create legal entity registrations for Mexico Federal Tax. The registration number is the RFC code issued by the Mexico government and it's also used to remit state income tax.

Set up Social Insurance registration information for a legal reporting unit (LRU) or a TRU in the territory where it operates. The registration number is the Social Insurance Number given by the Social Insurance office.

Use the Legal Entity Registrations task to set up registrations for legal entities.

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