13 Taxes

A tax is a sum of money imposed by a government, levied upon prepared food and beverages sold in a restaurant.

For non-Value Added Tax (VAT) operations, the per item active tax rate limit is 64. Eight of the tax rates can be inclusive.

Simphony aggregates all tax rates into daily tax totals. At an item level, the first 8 tax rates applied to an item are available.

The following table explains the Simphony methods of taxation.

Table 13-1 Tax Methods

Tax Method Description

Value Added Tax (VAT)

A VAT is a form of sales tax used in some countries. VAT is an inclusive tax, which means the tax is included in the menu item price. The global tax type can be set as European or United States. A VAT is calculated differently, depending on the global setting. In Europe, only inclusive type tax is calculated. In the United States, inclusive type tax and add-on type tax can be used at the same time.

VAT inclusive taxes are broken out from sales totals on financial related reports (for example, Revenue Center Financial Report or System Financial Report), with the inclusive tax reflected in the Tax Collected totals field.

If your property uses VAT, the following Reporting and Analytics templates can be applied for the Open/Closed Check reports:

  • EAME_MMRevCtrOpenChecks_VAT

  • EAME_MMRevCtrClosedChecks_VAT

Inclusive (non-VAT) Tax

Inclusive (non-VAT) tax uses the item price and a percent value to calculate the tax amount. The tax is then included in the price of each menu item added to the bill. For example, if the tax rate is 5% and the item price is $5.00, the inclusive tax method calculates by the formula: $5.00/(1+5%) = $4.76. The total cost for the customer remains $5.00, but the net sales price is $4.76 and the tax is $0.24. You can apply multiple inclusive tax rates to a menu item.

Inclusive (non-VAT) tax can be tax exempt. Inclusive (non-VAT) taxes do not appear on the Open Check Report in Reporting and Analytics, and do not print on Open/Closed Check reports.

Additionally, inclusive (non-VAT) taxes are broken out from net sales totals on financial related reports (for example, Revenue Center Financial Report or System Financial Report), with the inclusive (non-VAT) tax reflected in the Tax Collected totals field.

Add-on Tax

Add-on tax uses the item price to calculate tax, which is then added to the bill. For example, if the tax rate is 5% and the item is $5.00, the application calculates 5% of $5.00, posting $0.25 tax to the check and making the total due of $5.25.

Breakpoint or Threshold Tax

Breakpoints establish the points at which an increase of one cent in sales increases tax by one cent. For example, a breakpoint tax might be one percent for sales from zero to twenty cents and then two percent from twenty-one to forty cents. Twenty cents would be the breakpoint for this tax.

Applying Taxes

Tax Rates

Tax rates are the percentages charged by the taxing jurisdiction on menu items or service charges. Up to eight tax rates can be applied to a single check.

Tax Classes

Taxes are applied to items through tax class assignments. Tax classes group individual tax rates, allowing a single tax class to associate multiple rates with an item.

For example, a taxing jurisdiction may require a 5% state sales tax and a 2% city sales tax. By enabling these two tax rates in a tax class called “Sales Tax” and assigning this tax class to a menu item class, both tax rates will be applied to menu items in that class when they are included in a transaction.

Assigning a tax class to a discount causes the tax rates within that tax class to be waived on the discounted amount.

Enabling, Overriding, and Exempting Taxes

Enabling Taxes

Order type and serving period tax settings determine under which transaction conditions a tax is applied. Certain taxes may not be applicable for specific order types or serving periods. By configuring taxes to be active only for the appropriate order types or serving periods, the system ensures that taxes are excluded from transactions where they should not be used.

For example, a live entertainment tax may apply only to dine-in orders. In this case, the tax is enabled for the Dine-In order type but not for the To-Go order type. Additionally, enabling the tax for the entertainment serving period ensures that it is applied to dine-in orders only when the entertainment serving period is active.

Overriding Taxes

  • Tax Class Override

    The tax class override setting in a menu item definition and menu item price changes the tax class applied to the item when that definition or price is used. This is useful when a specific tax applies to a particular item or price—for example, a certain sized bottle in a package goods store or a price used at a certain time such as when entertainment is playing in a restaurant.

  • Condiment Parent Tax Class Override

    The Condiment Parent Tax Class Override, configured for menu item condiments, is used when a condiment changes the tax treatment of the parent menu item. For example, in some jurisdictions, a toasted bagel is taxed differently than an untoasted bagel. Assigning a Parent Tax Class Override to the toast condiment changes the tax applied to the bagel.

    The Condiment Parent Tax Class Override Priority determines which condiment’s tax class override takes precedence when multiple condiments are added to a menu item. Assigning a numeric priority to each condiment ensures the correct tax class is applied consistently according to the defined hierarchy.

Exempting Taxes

  • Tax Exempt Keys

    Four tax exempt keys—Tax Exempt, Tax Exempt Item, Exempt Item Tax Rate, and Exempt Tax Rate—can be used to exempt a tax or taxes from the check or a specific item.

  • Tax Exempt Tenders

    Service totals and tenders can be configured to exempt taxes. For example, the Employee Meal tender is used for employee meals, which are not actual sales transactions. Since sales tax should not apply to these meals, using the Employee Meal tender allows the transaction to be exempt from taxes when it is closed with this tender.

  • Tax Exempt Coupons

    A tax-exempt coupon is a special type of tax-exempt tender. Tax-exempt coupons exempt a prorated portion of the tax based on the tender total. They are used when part of the check is complimentary, but the guest is responsible for paying the remaining balance. Only the portion of the check paid by the guest is taxed. This approach is often used with meal vouchers, which are common in casinos and airports.