Overview of Chinese Statutory Deduction Cards
Oracle Payroll provides a set of predefined statutory deduction cards for use with Chinese legislations. It's helpful to understand these key concepts when working with deduction cards:
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Deduction groups
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Deduction card levels
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Deduction components
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Associations
Deduction Groups
Chinese statutory deductions are categorized into these deduction groups on the deduction card:
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Taxes
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Social Security
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Benefits
Deduction groups appear in the Deduction Overview section of the Manage Deduction Cards page.
Deduction Card Levels
You can create deduction cards at any of these levels:
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Personal (payroll relationship)
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Tax reporting unit (TRU)
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Payroll statutory unit (PSU)
Deduction cards capture different information at different levels. The information defined at a lower level overrides values defined at higher levels. For example, an exemption amount defined on a personal deduction card overrides the exemption amount defined in deduction cards at the TRU and PSU levels and in deduction ranges defined at the legislative level.
Use these tasks to manage deduction cards at each level:
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For personal deduction cards, use the Manage Personal Deductions task in the Payroll Administration work area.
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For TRU-level cards, use the Manage Legal Reporting Unit Deduction Records task in the Setup and Maintenance work area.
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For PSU-level cards, use the Manage Legal Entity Deduction Records task in the Setup and Maintenance work area.
Deduction Components
Each deduction group supports a set of deduction components that you can add to a deduction card. Supported components vary depending on the card level. Most deduction components correspond to a specific payroll deduction, such as individual income tax. However, some components, such as Foreigner Code and Social Security Card Number, capture information used only in reporting. You can create only one deduction component per deduction type on a deduction card, except for Social Security Card Number and Foreigner Code.
Each deduction component can have one or more sets of component details that capture data used to process the deduction. For example, the component details for a medical insurance deduction component capture the employee's account number into which contributions are made.
Deduction components in the Taxes deduction group include:
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Aggregation Information: This component is created automatically when you create a personal statutory deduction card, but you must create an association on the card linking the component to valid employment terms. This component has no component details and allows no overrides. It applies only to personal deduction cards.
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Individual Income Tax Deduction: Individual income tax is a mandatory deduction for all employees in most cases. Add this component to the personal deduction card of each employee requiring the tax calculation, and select the employee's tax exemption amount category. The application determines the tax exemption amount the person is entitled to based on the category you select. For example, effective from September 1, 2011, the amount for mainland China residents with mainland China income is 3500 yuan, and the amount for expatriates is 4800 yuan. If an employee qualifies for a further tax reduction or exemption, set the Tax reduction or exemption status to Yes, and then create an override that defines the employee's special tax reduction rate.
Rates and rules required for calculating individual income tax are predefined at the legislative level in deduction ranges. You can set up territory-specific tax exemption amounts at the PSU level. If an employee is entitled to a special tax reduction rate, you can enter the rate as an override on the employee's deduction card.
This table describes the deduction components in the Taxes deduction group.
Component |
Card Level |
When to Add Component to Deduction Card |
Component Details Captured |
Overrides Allowed |
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Aggregation Information |
Personal |
This component defines the level at which payroll run results are split for tax deductions. This component is created automatically when you create a personal deduction card. You must associate this component with a valid employment term. This component has no component details. |
None |
None |
Individual Income Tax Deduction |
Personal |
Individual income tax (IIT) is a mandatory deduction for all employees in most cases. Add this component to a personal deduction card to process IIT. The application determines the tax exemption amount the person is entitled to based on their category. For example, effective from September 1, 2011, the exemption amount for mainland China residents with mainland China income is 3500 yuan, and the amount for expatriates is 4800 yuan. If an employee qualifies for a further tax reduction or exemption, indicate so on in the component details and then create an override that defines the employee's special tax reduction rate. For example, if a person qualifies for 20 percent tax reduction, you would enter 0.2 in the Rate field. |
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Special Tax Reduction Rate |
Foreigner Code |
Personal |
Add this to an expatriate worker's personal deduction card if a company is located in an area where foreigner codes are issued to expatriates, as is the practice in Shenzhen. |
Foreigner code |
None |
Individual Income Tax Deduction |
PSU |
Add this component if you want to define territory-specific override values for tax exemption amounts. You must select a territory as a reference value for the component. The override values you enter will then be used when processing tax exemptions for that territory. |
None |
|
Social Security Deduction Components
You can set up calculation methods, rounding methods, rates and amounts for social insurance, public housing fund, and enterprise deductions by territory and hukou type at the payroll statutory unit (PSU) and tax reporting unit (TRU) levels. You can create overrides for these values on a personal deduction card as needed.
Social security deductions are optional pretax deductions. You can set up calculation methods, rounding methods, rates and amounts by deduction type by territory and Hukou type at the PSU level and at the TRU level.
Rates for social security deductions may vary by territory and Hukou type and must be defined as deduction card overrides; no rates are predefined in deduction ranges at the legislative level.
You can create overrides for these values on a personal deduction card as needed. This table describes the deduction components in the Social Security deduction group.
Component |
Card Level |
When to Add Component to Deduction Card |
Component Details Captured |
Overrides Allowed |
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|
Personal |
Add one or more of these components if an employee elects to take the corresponding deduction. |
|
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Social Security Card Number |
Personal |
Add this to capture a person's social security number and the territory where that number was issued. A person can have multiple social security card numbers issued by different territories. This information isn't used in payroll run processing or reporting. |
Card number |
None |
Common Information |
TRU |
Add this to define the social security contribution deferment type for a specific tax reporting unit. Do this during initial setup and as needed when changes occur. |
Social security contribution deferment type |
None |
|
TRU |
Add these components to define TRU-specific overrides and set the rounding method to use when calculating the contribution amounts if TRU-specfiic. Do this during initial setup and as needed when changes occur, if the values are different from those defined at the PSU level. |
Contribution Information Details, including the rounding method |
|
|
PSU |
Add these components to define PSU-level overrides and other deduction processing information, such as when and how to calculate the contribution base and the rounding method to use when calculating the contribution amount. Do this during initial setup and as needed when changes occur. |
|
|
*Not supported for Supplemental Medical Insurance, Maternity Insurance, or Work-Related Injury Insurance
Benefits Deduction Components
The Benefits deduction group includes the Enterprise Annuity component, an optional benefit that's provided by some employers in China, and may include other types of benefits. The component details you provide for an Enterprise Annuity are similar to those for Social Insurance components. Enterprise annuity is a post-tax deduction.
Component |
Card Levels |
When to Add Component to Deduction Card |
Component Details Captured |
Overrides Allowed |
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Enterprise Annuity |
Personal |
Add this to a personal deduction card if an employee elects to take the deduction. |
|
|
Enterprise Annuity |
TRU |
Add this to define TRU-specific overrides and to set the rounding method to use when calculating the contribution amount, if this information is TRU-specific. Do this during initial setup and as needed when changes occur, only if the values are different from those defined at the PSU level. |
Contribution Information Details, which specifies the rounding method |
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Enterprise Annuity |
PSU |
Add this to define PSU-level deduction processing, such as when and how to calculate the contribution base and the rounding method to use when calculating the contribution amount. Do this during initial setup and as needed when changes occur. |
|
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Tax Reporting Unit Associations
For personal deduction cards, you create associations that link components to a tax reporting unit. You must associate the Aggregation Information component with specific employment terms. You can associate one or more social insurance deduction components with different TRUs if, for example, an employee wants to contribute social insurance to a different area than they contribute individual income tax. To do so, you must first create an association linking the deduction card with the main TRU. Then you must add associations for each social security deduction component that reports to a different contribution area than the territory of the main TRU.