Copyright 2012, Oracle and/or its affiliates. All rights reserved.

Oracle Fusion
<Insert Picture Here>
Human Capital Management

Legal Structure
Legal Structures
Concepts

Legal Jurisdictions
Legal Authorities
Legal Entity / Legal Employer
Legal Reporting Units / Tax Reporting Units
Payroll Statutory Unit
Legislative Data Group

Copyright 2012, Oracle and/or its affiliates. All rights reserved.

Legal Structures
Legal Jurisdictions
Jurisdiction is where a particular piece of legislation applies, perhaps group of countries, country, state, county, or parish.
French Labor Law, Singapore Transactions Tax Law, and US Income Tax Laws are examples of particular legislation that
apply to legal entities operating in different countries' jurisdictions. You can create legal jurisdictions in addition to the
pre-defined ones.

Types of jurisdictions are: Identifying Jurisdiction, Income Tax Jurisdiction & Transaction Tax Jurisdiction

Identifying Jurisdiction
An identifying jurisdiction is the first jurisdiction you must register with to be allowed to do business in a country. For each legal
entity, select an identifying jurisdiction. If there is more than one jurisdiction that a legal entity needs to register with to commence
business, select one as the identifying jurisdiction. Typically the identifying jurisdiction is the one you use to uniquely identify your
legal entity.

Income Tax Jurisdiction

Income tax jurisdictions impose taxes on your financial income generated by all your entities within their jurisdiction. Create income
tax jurisdictions to properly report and remit income taxes to the legal authority.

Transaction Tax Jurisdiction

Tax jurisdictions and their respective rates are provided with transactions from the suppliers, and require periodic maintenance.
Create transaction tax jurisdictions through Oracle Fusion Tax in a separate business flow, because of the specific needs and
complexities of various taxes. Use transaction tax jurisdiction for legal reporting of sales tax and value added tax.

Copyright 2012, Oracle and/or its affiliates. All rights reserved.

Legal Structures
Legal Authorities

A legal authority is a government or legal body that is charged with powers to make laws, levy and collect fees and taxes, and
remit financial appropriations for a given jurisdiction. There are predefined legal authorities in the application, you can create
your own in addition.

The Internal Revenue Service is responsible for collecting taxes and the interpretation and enforcement of the Internal
Revenue Code of the United States.

Legal authority information is printed on your tax reports to meet some countries requirements, such as India and Brazil.

Legal authorities are defined in the Oracle Fusion Legal Entity Configurator.

Tax authorities are a subset of legal authorities and are defined using the same setup flow.

Legal authorities are not mandatory in Oracle Fusion Human Capital Management (HCM), but are recommended and are
generally referenced on statutory reports.

Copyright 2012, Oracle and/or its affiliates. All rights reserved.

Legal Structures
Legal Entities / Legal Employer

A legal entity is a recognized party with rights and responsibilities given by legislation

Define a legal entity for each registered company or other entity recognized in law for which you want to:
record assets, liabilities, and income;
pay transaction taxes;
perform intercompany trading

The contracting party on any transaction is always the legal entity.

Own the assets of the enterprise (as part of Fixed Assets and General Ledger)
Record sales and pay taxes on those sales (as part of Accounts Receivable)
Make purchases and incur expenses (as part of Payables)
Perform other transactions

Legal entities can be identified as legal employers and therefore, are available for use in Oracle Fusion Human Capital
Management (HCM) applications.

Copyright 2012, Oracle and/or its affiliates. All rights reserved.

 Legal Structures
Legal Reporting Units / Tax Reporting Units
Each of your legal entities has one or more legal reporting units to support local reporting requirements

Legal reporting units were referred to as establishments in R12 EBS

When a legal entity is created, a main LRU with the same name gets automatically created

A legal reporting unit is the lowest level component of a legal structure that requires registrations

Plan and define your legal reporting units at both the local and national levels if you operate within the
administrative boundaries of a jurisdiction that is more granular than country. For example, in India,
income tax exists at the national level where as professional tax exists at the state level.

You must register your legal entities and reporting units with legal authorities in the jurisdictions where you
conduct business

A tax reporting unit is the Oracle Fusion HCM version of the legal reporting unit in Oracle Fusion
Applications.

Use a tax reporting unit to group workers for the purpose of tax and social insurance reporting

Copyright 2012, Oracle and/or its affiliates. All rights reserved.

 Legal Structures
Payroll Statutory Units (PSU)

Legal entities are required to pay payroll tax and social insurance such as social security on your payroll.

You can register payroll statutory units (PSUs) to pay and report on payroll tax and social insurance on behalf of many of
your legal entities.

Payroll statutory units enable you to group legal employers so that you can perform statutory calculations at a higher level

In some cases, a legal employer is also a payroll statutory unit.

A legal employer can belong to only one payroll statutory unit.

You associate a legislative data group (LDG) with a payroll statutory unit to provide the correct payroll information for
workers

When you set up legal entities, you can identify them as legal employers and payroll statutory units, which makes them
available for use in Oracle Fusion Human Capital Management (HCM)

Copyright 2012, Oracle and/or its affiliates. All rights reserved.

Legal Structures
Legislative Data Groups (LDG)
Legislative data groups are a means of partitioning payroll and related data. At least one legislative data group is required
for each country where the enterprise operates.
Oracle Fusion Payroll is organized by legislative data groups.
Each LDG marks a legislation in which payroll is processed, and is associated with a legislative code, currency and its own cost key
flexfield structure
LDG is a boundary that can share the same set up and still comply with the local laws
Each legislative data group is associated with one or more payroll statutory units
Each payroll statutory unit can belong to only one legislative data group
For payroll purposes, it is recommended to have one legislative data group for each country, since you define elements, formulas, and payroll
definitions for a legislative data group. If you have multiple legislative data groups for a country, you will need to define the information again
for each LDG. If you are not using payroll, you may want to use legislative data groups since they are used in extracts and reports.

Copyright 2012, Oracle and/or its affiliates. All rights reserved.

Legal Structures
Org Model - Example
Enterprise Sun Power
Corp

Legislative Data Group

Sun Power Sun Power
US UK

Payroll Statutory Unit Sun Power Sun Power

US UK

Installation
Legal Employer Manufacturing US Installation US
UK

Installation US Installation
Materials US
UK
Tax Reporting Unit

Assembly US

Copyright 2012, Oracle and/or its affiliates. All rights reserved.

Legal Structures
Org Structures

Fusion Fusion Definition

Enterprise Top organization level for structures, entities and data

Legislative Data Group Localized payroll data partition

Payroll Statutory Unit Group of legal employers who are considered a single reporting
group for payroll purposes
Legal Employer A legal entity that employs people

Tax Reporting Unit An organization used to group employees for Payroll reporting

Copyright 2012, Oracle and/or its affiliates. All rights reserved.

Legal Structures
Org Structures

Fusion E-Business Suite PeopleSoft

Legislative Data Group Business Group Regulatory Region

Set ID
Payroll Statutory Unit Tax Group Common Paymaster

Legal Employer Reporting Organization Company

Tax Reporting Unit Government Reporting Company

Entity

Copyright 2012, Oracle and/or its affiliates. All rights reserved.

Legal Structures
Payroll Employment Model - Example

HR Model Payroll Model

David Ellis David Ellis

Work Relationship Work Relationship Payroll Relationship

(Manufacturing US) (Installation US) PSU: Sun Power US

Employment Terms Employment Terms Employment Terms Employment Terms

Permanent Temporary Permanent Temporary

Assignment Assignment Assignment Assignment

Project Manager Trainer Project Manager Trainer

Copyright 2012, Oracle and/or its affiliates. All rights reserved.

Legal Structures
Payroll Employment Model
Payroll Relationship
Highest level for which to accumulate balances
Elements are typically deduction elements such as tax, pension, social insurance or court orders

Terms
Helps to manage multiple assignments
Elements assigned are typically salary, pension or social insurance elements that vary based on terms

Assignment
Elements assigned are typically monetary terms and conditions such as overtime, bonuses, union dues etc

Copyright 2012, Oracle and/or its affiliates. All rights reserved.

Legal Structures
Manage Legal Entity HCM Information - Demo

Copyright 2012, Oracle and/or its affiliates. All rights reserved.

Legal Structures
Manage Legal Entity HCM Information Hands On

Copyright 2012, Oracle and/or its affiliates. All rights reserved.

Copyright 2012, Oracle and/or its affiliates. All rights reserved.