Chapter 5. Taxes
This chapter has information about configuring and applying taxes.
About Taxes in Prism
Prism uses Tax Code, Tax Area and Tax Rule to determine the tax amount for an individual item at POS.
- A tax code is assigned to every item in inventory. The tax code defines categories of merchandise, such as clothing, food, and jewelry, which may be taxed differently within any given tax jurisdiction. Prism comes with a default set of tax codes that handle most situations; however, you can add as many custom tax codes as needed.
- Tax areas are comprised of one or more Tax Rules that define the specific taxing instructions to be applied to items with each tax code. The tax code might designate an item as clothing, but the actual tax rate applied to clothing would be specified by the Tax Rule for that Tax Code in that specific Tax Area. Typically, you will need a tax area for each tax jurisdiction in which you make sales. You can also set up special tax areas for things like sales of normally taxed items to tax-exempt organizations.
Prism automatically calculates the correct amount of tax on documents for the tax method (e.g. Sales Tax or VAT) used by the retailer. If tax areas have been assigned to customers, then the computed tax amount for the correct area will automatically be suggested when a Bill To customer is added to a document. The suggested tax can be overridden for special situations.
The basic configuration steps are the same for all tax methods:
1. Select a tax method (sales tax or VAT).
2. Define tax codes.
3. Define tax areas. As part of defining tax areas, create separate tax rules (e.g., TAX, EXEMPT) for each tax rate applied.
4. Select the number of decimal places to use when displaying taxes.
5. Assign tax codes to Inventory items.
To access Tax Preferences, select Administration Console from the Prism menu. Open Preferences & Settings > Node Preferences > Taxes. The General area is where you select a Tax Method and options. The Tax Areas area is where you manage tax codes, tax areas and tax rules.
Node Preferences > Taxes > General:
Refer to the following table for information the Taxes > General settings:
Select the sales tax method used by the Subsidiary. Default is Sales Tax.
|Send Sale Tax Location||Select which store's tax area will be used when fulfilling a Send Sale transaction. By default, the Selling Location is selected. If necessary, you can change this to the Fulfillment Location|
|Include 1st Tax when Calculating 2nd Tax on Price||If selected, the 1st price will be included when calculating a 2nd tax on price. This is for countries where two sales taxes are applied to retail sales, sometimes separately, sometimes combined.|
|Calculate Tax 2 from Tax 1||
This checkbox is only enabled if the Multi-Tax VAT option is selected. This option is currently only needed by retailers operating in the state of Kerala, India. The state of Kerala has a tax system that adds an additional tax that is calculated off of the first VAT tax.
|Round Tax Amount||Select to round the tax amount (Tax $) at the subtotal level (rather than rounding each item's tax amount) when making receipts and sales orders. Important: Set the number of tax decimals to zero if rounding Tax $.|
|Rounding Method||When checked, rounds the total tax amount on the Receipt or SO to the next whole number. When checked, allows the users to select to always round up, always round down, or have the program decide (normal). Possible Values: Normal, Up, or Down, where Normal is the Default|
|Zero out tax for Detax customers||This preference is only available if the Tax Method is set to VAT (or ICM). If selected, when a customer whose Detax field is selected is added as the Bill To or Ship To customer on a transaction, the Tax $ amount will be set to 0.00.|
|Apply Detax to Tax%||If selected, the Tax % will be set to 0.00% and Tax $ will be set to 0.00.|
|Apply Detax to Shipping||If selected, the tax on the shipping amount will be removed when performing a Detax operation|
|Apply Detax to Fees||If selected, the tax on the fee will be removed when performing a Detax operation.|
|Allow Tax Rebate||Select the checkbox to enable the tax rebate options. The Tax Rebate feature enables retailers to refund all or a portion of a customer's paid tax. This feature is primarily used to make refunds of international VAT paid; however, it is available for use with other Sales Tax methods.
Tax rebates are based on a threshold value of the total tax amount of items purchased on a receipt. When the threshold is met, the customer is eligible for a refund of a percentage of the tax paid.
|Default Tax Rebate Percentage||Enter the default rebate percentage to use when the Cashier clicks the Tax Rebate button. The rebate percentage (or rebate amount) can be edited by the cashier, if necessary|
|Tax Rebate Threshold Amount||Enter a dollar amount from, in the range from 0 to 999,999,999.00.|
Node Preferences > Taxes > Tax Areas:
The Tax Method is a set of rules applied at the country or subsidiary level. By default, new Prism installations have the Tax Method set to Sales Tax. You can modify the Tax Method in Node Preferences > Taxes > General.
|Sales Tax||Standard sales tax as found in the United States.|
|VAT||Value Added Tax is the tax method used throughout Europe and in many countries in Asia. The tax rate (VAT rate) is applied to Price with Tax , rather than Price.|
|ICM||ICM is an alternative VAT system used in Brazil. When using ICM, the VAT percentage is applied to Price with Tax , rather than Price. The Brazilian government requires any fractional tax amounts computed on receipts to always be rounded up. Except where noted, instructions that apply to VAT also apply to ICM.|
|Sales Tax - Multi||Multiple sales tax environments, e.g. Canada. In most Canadian provinces, two sales taxes are applied at point of sale, a Provincial Sales Tax (PST) and a federal Goods and Services Tax (GST). GST applies throughout Canada. PST applies in British Columbia, Manitoba, Ontario, Prince Edward Island, Quebec, and Saskatchewan. A Harmonized Sales Tax (HST), which combines PST and GST, is used in New Brunswick, Newfoundland, Labrador, and Nova Scotia. In provinces using GST/PST or HST, one tax area must be created for the GST portion and one for the PST portion. Both tax areas are assigned to stores and the taxes are automatically applied to transactions.|
|VAT - Multi||
This is a VAT alternative used in certain countries, including India.
Note: Calculate Tax 2 from Tax 1 option
Viewing/Editing Transaction Tax
To view/edit tax information at POS, navigate to Transaction Details > Taxes. You can change the Tax Area, rebate tax, remove tax (detax) and view separate sales tax and order tax amounts.
Sample Transaction Details > Taxes tab:
Refer to the following table for information about the fields on the Taxes tab:
|Tax Area||The tax area used for the transaction. The tax rate will be the rate assigned to the tax area in RP9 preferences.|
|Tax %||The tax rate (percentage) used for the transaction.|
|Tax Amount||The total tax amount for the transaction.|
|Tax Area 2||(Multi-sales tax, multi-VAT environments) The tax area used for the second sales tax.|
|Tax 2 %||(Multi-sales tax, multi-VAT environments) the tax rate (percentage) used for the second sales tax.|
|Tax 2 Amount||(Multi-sales tax, multi-VAT environments) The total tax amount for the second tax area.|
|Sales Tax Amount||The tax amount applied to sale items on the transaction.|
|Order Tax Amount||The tax amount for order items on the transaction.|
|Sales Tax 2 Amount||(Multi-sales tax environments) The amount of a second sales tax applied to sale items on the transaction.|
|Order Tax 2 Amount||(Multi-sales tax environments) The amount of a second sales tax applied to order items on the transaction.|
|Avail Rebate Amount||The amount of tax available for rebate.|
|No Tax Rebate||If selected, no rebate is available.|
|Minimum Tax Amount||(Tax Rebates) The minimum tax amount as determined by the threshold amount.|
|Tax Rebate %||The rebate's percentage of the overall tax amount.|
|Not Persisted||If selected, the tax rebate % is updated automatically.|
|Tax Rebate Amount||The amount of tax that was rebated.|
|Detax||If selected, the user can remove tax from the transaction.|
|Detax Amount||The amount of any tax removed from the transaction.|
Taxes and the Subsidiary > Store > Workstation Hierarchy
How do tax methods, areas, codes fit into the hierarchy?
- Tax methods (Sales Tax, VAT, ICM, Sales Tax - Multi, VAT - Multi) can only be set at the Subsidiary level.
- You cannot assign a different tax method to different stores within the same subsidiary
- Tax area can be assigned ONLY on the store level
- Different stores can have different tax areas.
- Workstations ALWAYS inherit the tax of area of the store to which the workstation is assigned.
In Node Preferences > Taxes > General, you can enable tax rounding and select a rounding method. If selected, the tax amount (Tax $) is rounded at the subtotal level (rather than rounding each item's sales tax or order tax amount).
Tax Fields in Inventory and Documents
The following tax-related fields are available on documents and in Inventory records.
|Ext PWT||(Inventory records) Store Quantity * (Price + Tax)|
|Ext Tax 1 Amount||Store Quantity * Tax 1 Amount|
|Ext Tax 2 Amount||Store Quantity * Tax 2 Amount|
|Ext Tax Amount||Store Quantity * Unit Tax Amount|
|Tax 1 %||Tax 1 percentage, based on SBS/Store filter and applicable tax scheme|
|Tax 1 Amount||Tax 1 amount, based on SBS/Store filter and applicable tax scheme|
|Tax 2 %||Tax 2 percentage, based on SBS/Store filter and applicable tax scheme|
|Tax 2 Amount||Tax 2 amount, based on SBS/Store filter and applicable tax scheme|
|Enforce Orig Price Tax||If the "Enforce Original Price Tax" flag is selected in an item's Inventory record, then when listed on a POS transaction, the item's Force Orig Tax flag will be automatically selected. The flag can also be set manually by a user by going into Item Details. With the flag selected, Tax for the item is calculated based on the original (non-discounted price) rather than the discounted price. That is, the Price for the currently active price level in Inventory is used to calculate the Tax % and Tax Amt for the line item.
If the Force Orig Tax flag is NOT selected for an item on transaction, the tax amount for the item is calculated based on the discounted price. Important! The Force Orig Tax flag does not affect global (document-level) discounts or Percentage Reward programs. Default Setting: Disabled
Additional Tax-Related Topics
The following options are only available in VAT environments:
- Tax Rebates
Prism populates the DOCUMENT_TAX_BREAK table with tax area tax code tax percent and sum of tax amt. The DOCUMENT_TAX_BREAK table takes into account tax1 and tax 2 so if they have different tax area, tax code or tax percent, you'll get two rows populated.