Tax Rules
Each Tax Area has one or more Tax Rules that specify how tax is to be applied to items with the Tax Code for the Tax Rule. When defining a Tax Rule, you can:
- Assign a type (e.g. Luxury, Sliding)
- Specify a threshold. The tax will only be applied to amounts above the threshold.
- Define up to three different rates, with each rate being applied when the specified threshold is met (i.e. sliding tax)
Add Tax Rule
In Admin Console - Node Preferences - Transactions - Taxes - General, select the desired Tax Area from the drop-down. Click the Add button. The Add Tax Rule screen is displayed:
Enter a Name for the tax area.
In the Tax Rule Code drop-down, select the tax code that this rule will be applied to.
A set of check boxes let you designate the type of rule: Luxury, Rebate, or VAT Margin.
For each Threshold field, enter the amount at which the rate will be applied.
Note: Threshold 1 should be less than Threshold 2, and Threshold 2 less than Threshold 3.
Add Tax Rule screen:
Tax Rule Fields
| Field | Description |
|---|---|
| Name | Name of the tax area. Maximum 30 characters. |
| Tax Rule Code | A Tax Code is a label that designates the type of tax, if any that should be applied to the item. Each item is assigned a Tax Code. By default, items are assigned a Tax Code of TAXABLE. Each Tax Area can have its own rate defined for the TAXABLE Tax Code. Other default Tax Codes in Prism include EXEMPT. |
| Luxury | If selected, indicates that the tax rule will be applied as "Luxury Tax. Enabled = Apply tax as Luxury Tax. A Luxury Tax is different than a regular Sales Tax in that a Luxury Tax is typically only applied to the portion of an item's price above a certain threshold. This enables governments to tax so-called luxury items at a higher rate. |
| Rebate | Designates whether or not taxes applied by the Tax Rule can be rebated with Tax Rebate. Enabled = Taxes applied with this rule can be rebated. |
| VAT Margin | Designates whether VAT based tax values are calculated from the margin values. Normally with VAT you have a fixed sale price, a fixed VAT percentage and then calculate the price without tax from that (P$T$ - (P$T$ * VAT) = P$). If the "VAT Margin" option is selected in Prism Node Preferences > Taxes > Tax Areas, Prism will use the following calculation: (P$T$ - Cost) * Tax% / (100%+Tax %). |
| Threshold 1 | Designates the threshold in which Tax Rate 1 begins to be applied |
| Rate 1 | Designates the Tax Rate to be applied upon meeting Threshold 1. The actual methods for determining which portions of sale are taxed at Rate 1 may vary, depending on various settings. Specifically, the Luxury Tax flag determines if the rate slides fully or is segmented. |
| Threshold 2 | Designates the threshold in which Tax Rate 2 begins to be applied. |
| Rate 2 | Designates the Tax Rate to be applied upon meeting Threshold 2. The actual methods for determining which portions of sale are taxed at Rate 1 may vary, depending on various settings. Specifically, the Luxury Tax flag determines if the rate slides fully or is segmented |
| Threshold 3 | Designates the threshold in which Tax Rate 3 begins to be applied. |
| Rate 3 | Designates the Tax Rate to be applied upon meeting Threshold 3. The actual methods for determining which portions of sale are taxed at Rate 1 may vary, depending on various settings. Specifically, the Luxury Tax flag determines if the rate slides fully or is segmented |
| Char | Some countries have a tax requirement to show items that are taxable or non-taxable on the Receipt when both types are sold on the same transaction. The Char field is used to satisfy this requirement. |
| Message | Enter a string of characters. The characters can be printed along the bottom of the receipt as a Tax Code Legend (for example, "Non-taxable Item"). |
Notes about Tax Areas
Number of Tax Areas
If all of your sales are made within one tax jurisdiction, you may need only one tax area. If you sell under several jurisdictions, each with different tax reporting requirements, you will need tax areas for each.
Tax Exempt Sales
If you make sales to tax-exempt organizations such as schools and churches, set up a tax-exempt tax area with zero tax for use on those sales. You will then be able to quickly select that tax area at POS and track receipts by tax area on reports.
Defining VAT Rates
The rates for VAT are defined the same as for sales tax by simply entering the percentage in the first "Rate" column. Sliding taxes and luxury taxes should not be used with VAT.
Sliding and Luxury Taxes
Some jurisdictions use special types of sales tax known as sliding taxes and luxury taxes. A sliding tax applies a different tax rate depending on the item's selling price. A luxury tax applies the specified tax rate to only the portion of the item's selling price that is above a defined threshold amount.
Item Tax Threshold condition
Tax rates can optionally change at retail price thresholds or at quantity thresholds. You can specify in the tax area table the condition to use when defining your rate thresholds.
Assigning Tax Areas to Stores
You must assign a tax area to each of your stores, so you should define your tax areas before defining your store locations in System Preferences.