Tax Rates and Tax Classes

Simphony uses tax rates and tax classes to assign taxes to menu items, discounts, and service charges.

A tax rate is the percentage at which taxes are paid to a government. In some jurisdictions, multiple tax rates apply. Usually these tax rates must be calculated separately for accounting purposes (allowing each jurisdictional government to collect the appropriate tax amount).

A tax class is a collection of tax rates. Tax classes determine the tax rates that apply to menu items and service charges, and which tax rates can be reduced by discounts. Consider the following example: 2% City Tax Rate + 4% State Tax Rate = 6% Sales Tax (tax class which contains two tax rates). In this example, both the city and state tax rates are active for the Sales tax class. The total sales tax is 6%. By grouping multiple tax rates into a single tax class, you can view a record named Sales Tax.

You can associate a tax class with the following types of records:

• Menu Item Class: All menu item definitions in the menu item class are taxed using the tax class.

• Discount: When you assign a tax class to a discount, the taxes linked to the tax class are recalculated when the discount is applied using the reduced taxable sales value.

• Service Charge: Some types of service charges are taxed, such as banquet and room service transactions.

For server convenience, bars often use inclusive taxes. In some properties with multiple revenue centers, it is common that a bar revenue center uses inclusive taxes while a restaurant revenue center uses add-on taxes, even though both revenue centers serve the same items. In this scenario, the configuration of a Liquor tax class might be:

• Inclusive tax rate – 5%

• Add-on tax rate – 5%

Using this scenario, you can set either order types or serving periods to have the appropriate tax rates in the revenue centers. The following table shows an example configuration using Order Types:

Table 13-2 Example of Inclusive Tax with Multiple Revenue Centers

Revenue Center	Order Type Tax Configuration
Bar	Inclusive tax rate enabled Add-on tax rate disabled
Restaurant	Inclusive tax rate disabled Add-on tax rate enabled