Before you can set up your tax and social insurance deductions, you must create your social insurance and tax office information at the organization level, and link it to your employer. You then need to record the information that applies to each employee at the assignment level.

See: Setting up Tax and Social Insurance Organizations

   To set up tax and social insurance deductions for your employees:

1. Define your Earnings elements and select the predefined tax and social insurance secondary classifications.

   Attention: When creating an Earnings element, make sure you assign a secondary classification to indicate whether it is taxable or not. Failure to do so will result in the earnings element having a default classification of non-taxable.

   You must therefore assign one of the following secondary classifications to each of your Earnings elements:

   • Non-taxable: Earnings

   • Subject to standard tax: Earnings

   • Subject to special tax: Earnings

     When adding secondary classifications to an Earnings element, make sure you do not add the secondary classifications for different tax categories to the same element. For example, if an element has the classification Subject to Standard Tax, it should not also have the classification SI Income Subject to Special Tax.

     Similarly, if the element is non-taxable, you should not assign an SI Income or SI Gross Salary secondary classification that is taxable. If you choose different types of taxes for the same element, the tax may calculate incorrectly.

   See: Defining an Element

   See: Predefined Elements for a list of the taxation and social insurance elements provided with Oracle HRMS for the Netherlands.

   For information about the predefined primary and secondary element classifications (and their processing priorities), see: Survey of the Classifications

2. Link the Earnings elements, and the Taxation and Social Insurance Information elements to your payrolls.

   The information elements trigger the eligibility formulas. The tax formula enables you to determine if an assignment is subject to standard or special rate tax. Checking the taxable income balances for each tax type, it initiates the calculation formula for each one. The social insurance formula determines the social insurance types assigned to an employee, and initiates the contribution calculation formula for each eligible type.

   See: Defining Element Links

3. In the Element Entries window select the elements you have created to complete the information for the employee.

   See: Making Manual Element Entries

4. For the Social Insurance element, you can enter an override figure for SI days for each type of social insurance and a figure to override the real SI days derived value. The figures you enter here override any figures manually entered or derived at the organization and assignment levels. Use the SI days overrides to ensure the correct payroll results for your employees. Choose the Entry Values button to enter any override figures for the SI days.

   Note: If you enable Law Walvis, the application does not use SI days. Instead, calculations are based on the period amounts for SI thresholds and maximum wages.

   For more information on social insurance days see: Methods for Deriving Social Insurance Days and Setting Up Social Insurance Days

5. To make manual corrections to the tax deductions Oracle Payroll calculates and report them along with the deduction values in reports, such as payslip, wage report, remuneration statement, and annual tax statement, you can use the Standard Tax Correction and Special Tax Correction predefined balances. You must set up elements for these balances in accordance with your tax-correction requirements.