The Annual Tax Adjustment process facilitates end-of-year processing by computing the annual ISR liabilities of the eligible employees, comparing them against the appropriate ISR deductions, and reporting the final ISR withholdings and reimbursements still due. This process is driven off annual tax tables issued by SAT at beginning of the year and provides capability to compute tax using the Article177/178 method.
Tax adjustment for a financial year is normally carried out in the month of February of the following year, so it is likely that payroll runs for the month of January already exist before runing the tax adjustment run for the previous year. Though you can run this process at any time in the year, it is strongly recommended that you run it only once in the year when you are ready to make the final adjustments required by tax law. The default reporting period begins January 01 and ends December 01, although you can specify alternate reporting dates.
See: Entering Tax Registration Information
Oracle Payroll keeps a record of the employees for whom this process has been run and reports the information on Format 37 at the end of the year. To be included in this report, the employees must:
Earn less than $400,000 as yearly gross earnings
Been continuously working between the reporting dates
Not explicitly excluded by a Human Resources manager
Due to the sequential nature of the payroll process, you cannot run a payroll when future actions already exist. The Annual Tax Adjustment concurrent program uses Fast Formula-based balance adjustments instead of the standard payroll run. This process adjusts the value of the ISR Tax Withheld and other associated balances for the affected employees.
Note: The Annual Tax Adjustment process is different from the Tax Adjustment Run type that you can select while running Quickpays or Payroll Runs. While you can run the Tax Adjustment run type several times in the year, you should run the Annual Tax Adjustment process only once at the end of the year. Oracle Payroll tracks the Annual Tax Adjustment process for an employee and reports it on the end-of-year reports like Format 37 and DIM. The results of the Tax Adjustment run type are not reported on any statutory reports.
According to SAT Statutory rules, employees who have changed legal employer in the middle of the year are not eligible for annual tax adjustment. Oracle Payroll for Mexico provides a formula function named CHECK_EE_LEGAL_EMPLOYER_CHANGE to identify whether an employee has changed legal employer in the middle of the year. You must modify the existing formula text associated to the Annual Tax Adjustment Assignment Set, by adding the formula function call.
Example:
You can use the following example to modify your existing formula.
/*
*** Date: 07 Feb 2008 23:52 ***
*** Author: HRMS MX PM ***
*** Assignment Set formula to check the employee ***
*** eligibility according SAT statutory rules ***
*** 1. EE did not request report the F37 by himself ***
*** 2. EE has earned ISR subject earnings ***
*** 3. EE has not earned more than 400k pesos in FY ***
*** 4. EE has worked the entire FY ***
*** 5. EE has not changed Legal Employer in the entire Year ***
*/
INCLUDE_FLAG ='N'
IF IS_PER_EXEMPT_FROM_ADJ () = 'N' AND /* EE not exempt of Ann Adjustment */
IS_ASG_EXEMPT_FROM_ISR () = 'N' AND /* EE has subject earnings */
CHECK_EE_SAL_CRITERIA () = 'Y' AND /* EE earned less than statutory limit ($400k) */
CHECK_EE_EMPLOYMENT_CRITERIA () = 'Y' AND /* EE worked the whole FY */
CHECK_EE_LEGAL_EMPLOYER_CHANGE () = 'N' /* EE has not changed Legal Employer in the entire Year */
THEN
INCLUDE_FLAG ='Y'
RETURN INCLUDE_FLAG