How to handle taxes in the Booking Engine
You can set up different taxes in your Booking Engine that are used to automatically calculate how much of the price of a reservation is due to taxes. Keep in mind that only Supervisor users can set up and configure tax rates in the Booking Engine.
You need to make sure that at all times, the taxes set for your property in the Booking Engine match with the taxes required by your country, region and/or city.
Once your taxes are correctly set up, they will appear in the guest facing booking engine when guests are finalising their reservation. The tax information will be used when processing payments for deposits if you are using a payment gateway connected to your Booking Engine.
If you are connected to a Channel Manager and if the Channel Manager is in turn connected to a PMS, reservations will be sent with the tax information to the Channel Manager and then to the PMS, if the PMS can receive it. However PMSs will often recalculate the tax internally and simply use the fully taxed price of the reservation to define the net price and the tax of the reservation.
Create, edit or delete a tax
To find the tax settings in the Booking Engine, click on the Setup tab, then on Property and then on the Taxes tab to find the options to set up your taxes.
To create a tax:
Click Create
Enter the Tax Name
Under Type Select Percentage tax or Fixed amount
Click Create
To edit an existing tax:
Click on the tax name of the tax you wish to edit
Modify the available fields
Click Save
To delete an existing tax:
Click on the tax name of the tax you wish to delete
Click Delete.
Click OK to confirm (or Cancel, if you changed your mind)
Types of tax (percentage or fixed amount)
When creating or editing a tax, you are asked for the type of tax you want to use.
There are two types of tax that you can create in Booking Engine - Percentage tax and Fixed Amount tax.
Percentage Tax is calculated as a percentage of the cost of the booking. For example VAT/GST or state tax are usually percentage taxes.
Fixed amount tax is an amount added on top of the booking. Examples that are commonly fixed amount include tourist tax, eco-tax, reef tax and city tax.
Percentage Tax
When you choose Percentage Tax, you need to enter a value with up to 2 decimal places. This will apply as a percentage of your reservation.
You can define where to apply a percentage tax by ticking the appropriate box under "Where should this tax be applied?":
Everything (default) - the tax is applied to the total reservation charge, including room and extras charges
Rooms - the tax is applied to the total room charges including extra occupants charges
All Extras - the tax is applied to the total extras charges only
Some Extras - the tax is applied to selected extras only. You can tick which extras the tax applies to.
Fixed amount
When you choose Fixed Amount, you need to enter a value. This will apply as a fixed tax for your reservation in the currency of your property.
You can define how the fixed amount tax is applied by choosing the appropriate option from the drop-down menu:
Per Booking : the tax is applied once on every booking, even if it's for multiple rooms at once
Per Person : on every booking the tax will be repeated for every guest
Per Person Per Night : on every booking the tax will be repeated for every guest and for every night of the stay
Per Room : on every booking the tax will be repeated for every booked room
Per Room Per Night : on every booking the tax will be repeated for every booked room and for every night of the stay
Per Night : on every booking the tax will be repeated for every night of the stay
How to handle tax changes, temporary tax cuts and seasonal taxes
The taxes you set in the Booking Engine always need to be current.
If your country, region or city has changed the amount of taxes paid for staying in a room, you should change the tax settings as soon as possible. If the taxes have changed temporarily, or they always change periodically (seasonal tax), you will need to manually change the tax settings every time the taxes change.
What to keep in mind regarding tax changes
If you know that the taxes will change in a few months, reservations will arrive for the time period with the new tax settings and depending on the way you handle payment, the taxes that the guests see when they make the booking may not be relevant anymore at the time of check-out.
Normally, countries require the taxes to be applied in accordance to the legislation active at the time of payment.
This means that:
For reservations paid entirely at the time of booking (non-refundable), the taxes shown to the guests are the correct ones. If you don 't have a payment gateway connected to your Booking Engine, make sure to process the payment before the new property tax settings are applied.
For reservations paid entirely at the time of check-out (refundable), the taxes shown to the guests when booking might not match the taxes that will be paid on check-out, however the important is that you give the guest the same gross price as was initially stipulated at the time of booking and divide the tax vs net price correctly at the time of payment. If you are using a PMS connected to the Channel Manager, you might want to refresh the tax settings of the reservation by opening the reservation in the Booking Engine extranet and modifying it (making a minor change like adding a note). This will cause the price with the new taxes to be sent to the PMS. However usually the PMS should handle taxes internally.
For reservations with a partial deposit paid at the time of booking and the rest paid at check-out , the taxes might be different for the deposit and the check-out payment. The deposits will be handled with the correct taxes, however the taxes will need to be recalculated separately for the check-out payment. If this creates complications when issuing invoices, it is advised to avoid this type of policy if your area has seasonal taxes or is expecting a tax change in the future.
Temporary taxes and rates exclusive of taxes
It is not advised to use tax exclusive rates if your area has a seasonal tax or is expecting a tax change in the future.
If you still wish to use tax exclusive rates even though your area has a seasonal tax or is expecting a tax change in the future, it is especially advised to only use non-refundable rates that are fully paid at the time of booking.
If you are using tax exclusive rates for your property, normally the prices in your guest facing booking engine will change depending on your tax, however you cannot set your tax to be only applied on a certain time range, which causes complications because normally countries require the taxes to be applied in accordance to the legislation active at the time of payment.
Room rates that are paid at the time of booking don't require any price adjustment depending on the stay dates.
Here is an example of what happens with tax exclusive rates fully paid at booking:
You sell a room using a non-refundable rate at 100$ exclusive of tax on all days of your calendar.
The tax in 2020 is 5% and in 2021 it will be changed to 20%
The room appears sold as 105$ for all days, comprising 2021, because 5% is your current tax setting
If a guest books a room for 2021 at a cost of 105$ and pays in 2020, that will be the correct cost and tax for the room.
Once you change the tax in 2021 to 20% the room will appear sold as 120$ for all days, which will cause all bookings to have the correct price again
Room rates that are paid at the time of check-out need to be adjusted so that the cost considers the tax for that stay period. If your taxes change in the future, you will need to manually adjust the rates for the time period that will have the new tax. For this you can use any tool that lets you adjust prices, such as changing the price directly in your Booking Engine inventory or, if you are connected to the Channel Manager, changing the price directly from the Channel Manager inventory.
Here is an example of what happens with tax exclusive rates fully paid at check-out:
You sell a room using a refundable rate at 100$ exclusive of tax on all days of your calendar.
The tax in 2020 is 5% and in 2021 it will be changed to 20%
The room appears sold as 105$ for all days, comprising 2021, because 5% is your current tax setting
To make the room appear as 120$ for 2021 you will need to adjust the 2021 price to 114.29$, so that the price sent to the channel and booking engine for that time period is 114.29+5%=120.0045 (~120)
Guests making a reservation from your booking engine will see that they will pay "114.29$ with 5.71$ tax"
In 2021 you change the tax to 20%
You will need to adjust your prices to 100$ again so that they appear correctly as 120$ when booking.
When the guests pay at check-out, they will see that they are paying "100$ with 20$ tax" which amounts to the same full price, but with a different division of taxes they saw on booking.
As you can see, this is a complex process, which is why it is advised to avoid using tax exclusive rates paid at check-out if your area has a seasonal tax or is expecting a tax change in the future.
What to do if your area requires different taxes for different services provided by your hotel
In some countries, the tax is different between room stays and certain other services the hotels can provide, such as food, beverages (especially alcohol), spa treatments, etc.
For example, if your country is taxing the sale of alcoholic beverages at 20%, but all other services comprising rooms are taxed at 5%, you would need to do the following:
Create a Percentage Tax for 5%
Under "Where should this tax be applied?" tick Rooms and Some Extras
Under "Some Extras" tick all the extras that are a service different from alcoholic beverages
Save these settings
Create a Percentage Tax for 20%
Under "Where should this tax be applied?" tick only Some Extras
Under "Some Extras" tick all the extras that are alcoholic beverages
Save these settings
Please note that in this example, if you have extras that provide both alcoholic beverages and other services, you will need to separate these extras. For example you cannot have an extra "Dinner with a bottle of champagne" since the dinner is taxed separately from the champagne.
Changing from one simple tax to different tax for different services
If your country used to have the same percentage tax on all services provided by your hotel, but is now changing the tax to be different for different services, make sure to remove the old taxes before creating the new ones.
Set up rates to be inclusive or exclusive of taxes on the inventory in the Booking Engine
You can choose to enter your daily rates inclusive or exclusive of taxes to comply with the standard in your country.
To enter rates inclusive of taxes on the Inventory:
Click the Setup tab
Click the Property tile
C lick the Taxes tab
Select your preferred tax settings by checking or unchecking
Enter rates including Tax and Service Charge on Booking Engine
If you check this option, the rates you enter in the Inventory Grid and all your extras will include percentage taxes and fees you have set up in the booking engine. For example, if a property enters a rate of $100 on the Inventory Grid, the rate a guest will pay upon checkout will be $100. This is because all taxes and fees are included in the rate that was entered in the inventory grid.
If you uncheck this option, all rates entered in the Inventory Grid and all your extras will exclude taxes and fees. All taxes and fees will be added on top of the amount at checkout. For example, if a property enters a rate of $100 on the Inventory Grid, and they have a country tax of 10% set up, the rate a guest will pay at checkout will be $110.
Set up the display of rates as inclusive or exclusive of taxes
You can choose to display rates on the booking engine to be inclusive or exclusive of tax and fees.
To manage tax display settings on the booking engine:
Click on the Setup tab
Click the Property
Click the Taxes tab
Select your preferred tax settings by checking or unchecking
Show Rates including Tax and Service Charge on the Booking Engine
If you check this option, you choose to display the rates with taxes included to avoid surprising customers with any additional fees during the booking process.
If you uncheck this option, you choose to display lower rates without taxes so you can attract more customers.
Your rates will now be displayed according to your latest tax display settings in the booking engine.
The list of taxes will still be visible to guests on the booking engine and in reservation emails regardless of the display settings.
What is zero-rated percentage tax?
A Zero-rated percentage tax refers to items, for example, rooms and extras that are taxable, but currently, the tax rate on them is nil or zero. It is more common in the countries that use a value-added tax (VAT).
Zero-rated percentage tax is created and displayed just like all other percentage taxes on the Booking Engine.