Updated: September 12, 2023 7:53am

Detax

Retailers who operate in VAT environments have access to two special feature related to taxes: Detax and Tax Rebate. It is important to understand the difference between these features so you know which one to use.

  • Tax rebate designates a portion of the tax paid to be rebated to the customer at a later date. Tax rebate does not update the transaction total.

  • Detax is the full removal of a tax for special groups of customers who are exempted from the tax. Detax updates the transaction total.

Detax is typically used with certain customers who are exempt from paying tax (e.g. diplomats). In Prism, the flag is called "Detax" and such customers are referred to as Detax Customers. To use Detax, you must configure  Prism preferences to enable the feature. If you want detax to occur automatically, you must select the Detax flag in the customer record of eligible customers. Note: Merchants can manually detax a transaction that does not have a customer; however, by configuring preferences and customer records correctly, detax will occur automatically when the customer is entered.

Basic Steps for Detax
1.    Select Detax flag of eligible customers in the customer record.
2.    Configure Detax permissions.
3.    Configure Detax preferences. (Note: To detax fees/shipping, the fee type must have a tax percentage defined)
4.    To detax a transaction, enter the customer and list the items being purchased and enter any fees or shipping charges as needed. If configured for automatic detax, the transaction is automatically detaxed when an eligible customer is entered. If configured for manual detax, in Transaction Details select the Taxes tab and click the Detax button.
5.    Tender the transaction and update.
Detax Flag in Customer Record
1.    Use Customer Lookup to find and display the customer's record.    
2.    Touch or click the Credit Detail Button.    
3.    Touch or click the Edit button.     
4.    Navigate to the Detax field. Select the check box to designate the customer as a Detax Customer. If selected, and "Zero out tax for Detax customers" is enabled in preferences, transactions listing the customer are eligible for detax.    
5.    Touch or click the Save button.     

Configure Detax Preferences
The following preferences control to Detax. To access these preferences, go to the Admin Console and select Node Preferences > Taxes > General. Refer to the following table for a description of the preferences.

Preference Description
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 removed/set to 0. Use this option if you want the Detax to occur automatically at POS.
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 shipping (if any) is automatically set to 0.00 when a user touches or clicks the Detax button.
Apply Detax to Fees

 If selected, the tax on fees (if any) is automatically set to 0.00 when a user touches or clicks the Detax button.

Note: To apply detax to shipping/fees, the fee types must have a tax percentage defined.

If the Tax Incl. (Tax Included) flag is selected for a fee type, then whatever value the user enters will be automatically adjusted to include the tax amount in the fee.
Example (VAT Environment)
Fee has a tax percentage of 10% in preferences. User enters a Fee of 100.00 on transaction
If Tax Incl. flag is selected:
Fee Tax Amount: 9.09
Total Fee without Tax: 90.91
Total Fee with Tax: 100.00
Tax Incl. flag is not selected.
Fee Tax Amount: 10.00
Total Fee without Tax: 100.00
Total Fee with Tax: 110.00
Apply Detax [Before or After Discount]

Controls when detax is applied, before or after discounts.
Before Discounts, when Detax flag is enabled:

  • Items are posted with the tax portion of the VAT price removed
  • Discounts are applied against the Detaxed price
  • Detaxed Active Price - Discounts = Detaxed Receipt Price
When Detax flag is disabled: Items are posted with the full VAT price, tax included, discounts are applied to the full VAT price and Taxed Active Price - Discounts = Taxed Receipt Price
Note: As the Detax flag condition changes and the receipt items are reprocessed, the pricing will toggle to the appropriate method. Discounts will process forward from that state.
After Discounts, when Detax flag is enabled:
  • Items are posted with the full VAT price, tax included
  • Discounts are applied to the full VAT price
  • Taxed Active Price - Discounts = Taxed Receipt Price
  • Tax portion of Receipt Price is removed

When Detax flag is disabled: Items are posted with the full VAT price, tax included, iscounts are applied to the full VAT price and Taxed Active Price - Discounts = Taxed Receipt Priced
As the Detax flag condition changes, the tax values will be included or removed.

Removing Automatic Detax
If you need to remove an automatic detax, simply remove the customer from the transaction.
 Manual Detax
Users with the required security permission can manually detax a transaction.

  1. Start a new transaction. Enter the customer and list the items being purchased.    
  2. Touch or click the Transaction Details button.    
  3. Select the Taxes tab.    
  4. Touch or click the Detax button. The tax is removed from the transaction.    
  5. Touch or click the OK button.    
  6. To verify the detax amount, go back into Transaction Details, select the Taxes tab and scroll down to the Detax Amount field.    

Checking Detax Amount on Transaction
To verify the amount of tax removed, go to Transaction Details and select the Taxes tab. Navigate to the bottom of the screen to the Detax Transaction area.

Detax Status of Returned Items
Prism tracks the detax status of individual transaction items. When returning an item that was detaxed, even if the detax customer is changed or removed, the item being returned will retain its orginal detax status. That is, tax was removed when the item was purchased (detaxed). It should not, therefore, be added just because it is being returned (regardless of who the customer is doing the returning).  This prevents tax from being incorrectly applied to return items.

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