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Tax and service charges - frequently asked questions
Tax and service charges - frequently asked questions
Updated over a week ago

We have compiled answers to the most common questions that hoteliers have when setting up their tax and service charges in their Property Platform’s booking engine. This covers everything from existing bookings, to legislative tax changes, and cases where your goods and services are taxed at different rates.

If I change my tax settings, how will this affect existing bookings?

When you create, edit, or delete a tax, this change will only apply to new bookings. It will not affect bookings created prior to the change.

How do I handle tax changes, temporary tax cuts, and seasonal taxes?

If your jurisdiction has changed the tax rates on your goods and services, you should change the tax settings as soon as possible. If the tax rates have changed temporarily or if they change periodically (such as seasonal taxes), you will need to manually change the tax settings each time your taxes change.

It is not possible to manage future tax settings for an upcoming date; these settings can only be applied to the present. Therefore, if your legislative tax rates are due to change in the future, you will need to wait until that date to change your tax settings and then change them immediately.

Because your tax settings apply only to the present time, if a booking is made for a future date in which your taxes will have changed, then this is an issue that you will need to be aware of and deal with particularly depending on your local tax laws.

➕ For example, say that tax rates were due to change in two weeks’ time and a booking for three weeks’ time was made just then. In this case, the tax rates for the booking would be calculated at today’s tax rate, even though the booking has been made for a week in the future when the tax rate will be different.

Should I enter tax-exclusive rates into my Inventory if a tax change isexpected in the future?

It is not advisable to use tax-exclusive rates in your Inventory if you are expecting a tax change in the future, you should consider turning on the tax- inclusive Inventory setting instead.

If you wish to continue using this tax-exclusive setting, we recommend only advertising rates that are non-refundable and require full payment at the time of booking. This is because refunds become problematic if the tax rate changes between the time payment is made and a refund requested.

Partial payments may be problematic if the tax rate changes between payments.

What should I do if my different goods and services are taxed at different rates?

In some jurisdictions, rooms may be taxed at a different rate to food and beverages. Alcoholic beverages may also be taxed at another different rate.

In this scenario, percentage taxes need to be created for each of these different rates in the property platform. For each tax you create, you would use the Tax applied to checkboxes to apply the tax rate to the relevant goods and services as required by the applicable tax legislation.

For example, your rooms may be taxed at 10%, so you could create a new tax called “Room tax” and set the Tax applied to as All rooms.

Your alcoholic beverages may be taxed at 30%, so you would create a new tax called “Alcohol excise.” Then in the Tax applied to section you would tick all of the alcoholic beverages.

How do I handle cases where different taxes apply to different parts of asingle good or service that I provide?

One example is a “Dinner with a bottle of champagne” extra. If the food is taxed at a different rate to the champagne, this extra will not charge the correct tax for either. The solution is to create “Dinner” and “Bottle of champagne” as separate extras. Then create and apply separate taxes to each.

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