Responsibility: Legal Entity Manager
Navigation: Legal Entities > Create Legal Entity

Legal Entity: A legal entity is a clearly identified entity, which is given rights and responsibilities under commercial law, through registration with the country's appropriate legal authority. Legal entities are responsible to account for themselves to company regulators, taxation authorities, and owners according to rules specified in the relevant legislation.

In Release 12 Legal Entities "own" one or more Operating Units which in turn "own" transactions.

Tax Relevancy: 
1)  For E-Business tax, a tax regime can be associated to a Legal Entity and then optionally one or more Operating units in that Legal Entity can share the tax setup. 
2)  The Registration defined on the Legal Entity record is the source for the legal establishment defaults.  The Establishment tax profile in turn feeds the Bill From in AR and the Bill To / Ship to in AP. 
3)  The checkbox on the Legal Entity controls self-assessment of taxes.  For Canada, GST and HST must be self-assessed for imported goods.  Be sure you update the Legal Entity to reflect this after it is created  

Legal Establishment  First party legal entities identify your organization to the relevant legal authorities, for example, a national or international headquarters. First party legal establishments identify each office, service center, warehouse and any other location within the organization that has a tax requirement. When you create a legal entity, the system automatically creates a legal entity establishment. You can create additional legal establishments according to your needs. For each legal establishment there are one or more tax registrations, depending upon the tax requirements of the applicable tax authority.

If you have multiple legal establishments you should additionally create records as children of the Legal Entity.  Be sure to set the "Self Assessment" to the proper value when creating additional legal establishments. 

Tax Relevancy
1) The Registration defined on the legal establishment feeds the Bill From in AR and the Bill To / Ship to in AP.  These addresses are then considered if your tax rules use these as the basis for tax calculation.
2) The checkbox on the Legal Establishment controls self-assessment of taxes. For Canada, GST and HST must be self-assessed for imported goods. Be sure you update the Legal Establishment to reflect this after it is created

Ledger:  Also known as set of books in 11i and prior releases this is the object that owns the accounting structure used for transactions.

Operating Unit: Assign operating units to the primary ledger to partition subledger transaction data when multiple operating units perform accounting in the context of one or more legal entities.  At least one Operating Unit must be defined for each legal entity and set of books.  Operating Units are also referred to as "Organizations".

The Operating Unit Location is taken from the Legal Establishment record referenced in section 3 above

Tax Relevancy:  Operating Unit along with Legal Entity represent two levels where tax content can be owned and tax setup performed.