Changing Tax % due to tax regulation amendments : Support Centre

This article aims to provide a comprehensive guide on the steps you need to take when facing changes in the tax rate, as set by your government. It addresses both scenarios: whether the tax rate for the services you provide is being decreased or increased. This guidance is crucial for ensuring your business remains compliant and financially sound during these adjustments. When referring to the tax rate, we are specifically addressing various types of consumption taxes such as but not limited to VAT, IVA, TVA, BTW, MwSt in EU, state taxes in the US are any equivalents in the rest of the world.

Overview of Tax Rate Modifications

Adjusting to new tax rates involves two critical areas of focus:

Configuration in Clock PMS+: This encompasses modifications to charge templates and overall tax settings within the software.
Impact on Bookings: This includes managing bookings and events that are scheduled to commence or are ongoing during the tax rate transition period.

Important: It's imperative to note that all necessary modifications in Clock PMS+ should be implemented precisely on the date when the tax rate change takes effect. For illustrative purposes, this article will refer to January 1, 2024, as the hypothetical date for the implementation of new tax rates.

Configuration in Clock PMS+

Here are the changes to the configuration you need to make:

Charge Templates

Start by navigating to menu Settings -> All Settings -> Charges and taxes -> Charge templates.
Depending on which tax rate is being change (e.g. for Accommodation; for F&B services; for other services) edit each charge template that is subject to the change.

set the new tax rate value in the field Tax %

Save.
Follow the same procedure for each charge template that has its tax rate changed.

Overall tax settings

Navigate to menu Settings -> All Settings -> Charges and taxes -> Taxation
The tax rate that is set in field Default Tax percent is usually the tax rate of accommodation services. Change the value in this field only if the tax rate for accommodation is being changed by the government.

Save.

Surcharge

If you use the 'Surcharge' functionality in Clock PMS+ and it is also subject to a tax rate change, navigate to menu Settings -> All Settings -> Charges and taxes -> Surcharge and change the Tax % in that section.

City Tax

If tax (VAT, IVA, MwSt., etc.) is also charge on City Tax in your country and is also subject to a tax rate change, navigate to menu Settings -> All Settings -> Charges and taxes -> City Tax and set the new value in the tax % field.

Important: Remember, implement these changes on the date when the tax rate change takes effect.

Modifying existing bookings

The next steps relate to adjusting existing bookings in the system that are fully or partially subject to the tax rate change.

Important: all of the below should be done after you've made the changes to charge templates and overall tax settings.

Existing bookings arriving after the tax rate change

Navigate to menu Booking -> Advanced Search
in the field 'Arrival' enter a period starting 01 Jan 2024 and ending e.g. 31 Jan 2024.

Tip: Use shorter periods when searching (e.g. 1 month). Depending on the volume of bookings, generating the results for longer periods might reach the server time-out limits and results will not show. Repeat the steps for the remaining periods.

in the 'Status' field select 'Expected' and search

the results will show all 'Expected' bookings arriving in the respective period.
click on 'Select all' (1) so all bookings are selected;
click on 'Rate' (2) and select 'Rate re-post*' (3)

Upon activating this function, there will be an immediate recalculation of all charges influenced by the new tax rate. This includes accommodation charges and any charges arising from a package linked to the rate, ensuring accurate and up-to-date billing.

*Understanding the 'Rate Re-post' Function'

It's crucial to understand that the 'Rate Re-post' feature specifically recalculates charges that originate directly from the rate. This encompasses accommodation charges and charges from any packages associated with the rate. Here’s how it works in different scenarios:

Package Rates (e.g., Including Breakfast): If you offer package rates that include services like breakfast, both the accommodation and breakfast charges will be recalculated, and any applicable changes due to the new tax rate will be automatically updated.
Room-Only Bookings with Added Extras: In cases where guests initially book a room only and later add services (like breakfast) through various channels (BookDirect, Front Desk, or Self-service portal), the recalculation and application of the new tax rate will only affect the accommodation charges. Any extra services added separately will require manual adjustment in the folio (see below).

*Function 'Rate Re-post' and Manual prices

As previously noted, the 'Rate Re-post' function is designed to recalculate accommodation charges. This implies that if there has been a change in the room price for a particular stay period between the booking date and the date of rate re-post, the new price will be automatically applied.

For instance, consider a scenario where a guest booked a stay for January 5, 2024, back in November, with the price at that time being 100 EUR. If, in the interim, you have revised the price for January 5, 2024, to 120 EUR, then upon implementing the rate re-post, the updated price of 120 EUR will be charged instead of the original 100 EUR.

To avoid the new price being set, prior to doing a rate re-post of a booking, you can set the prices the guest booked on as 'Manual prices'. To do so:

Open and Edit the booking
Click the 'Manual prices' button.
If there are already manual prices set (all channel manager bookings and other) do not make any changes, save the booking and continue with the rate re-post.
if there aren't any manual prices entered, either calculate an average price per night for the booking, enter it, select the currency and save or enter the price for each night of the stay and then save and proceed to do the rate re-post.

Important: When preparing for the 'Rate Re-post' process, it is particularly crucial to set up manual prices in advance, especially if you utilize Occupancy Adaptable Rates. The nature of these rates means that prices are dynamic, fluctuating in response to your current availability. As a result, when you implement the rate re-post, it is highly likely that a different price - one reflective of the most recent rate based on current occupancy levels - will be applied, rather than the original price at which the guest booked.

Existing bookings staying during the tax rate change

Note: Do not use the Rate Re-post for these bookings as all charges (for 2023 and 2024) will have the tax rate for 2024 applied. If, you've used the Rate re-post for such a booking, follow the same steps but instead of adjusting charges for 2024, adjust the charges for 2023.

Of course, there will be also bookings that stay throughout the tax rate change - arriving in December and leaving in January (when using our hypothetical tax rate change date of 01 Jan 2024). Adjustments to the charges for the affected dates for these bookings can only be done manually and folio by folio. Here are the steps:

open the folio of the booking and click to see the 'Details' of the charges

when you are presented with the list of all charges for the bookings, use the 'Period' filter and enter a period starting 01 Jan 2024 and ending the day after the departure date of the booking. This will leave only the charges for dates within the period.

select the charges for which you want to apply the new tax rate or click 'All' to select all of them, if they are subject to the change. Then click on the 'Functions' button on the top right and select 'Edit'

activate the 'Tax %' field and enter the new tax rate applicable to these charges and save.

repeat these steps for each booking that stays throughout the tax rate change.

Extras added to bookings, Non-resident and Company folios

Important: Please note that the above manual process for changing the tax rate should be also applied to:

Extra services added to bookings - either by guests booking extra service through BookDirect/SSP or manually added to folios by Clock users
Charges posted in Non-resident folios
Charges posted in Company folios

Events

Charges in Event folios can only be adjusted manually. Open the Event folios for events starting after 01 Jan 2024 or start in Dec of 2023 and end in Jan 2024 and following the instructions mentioned above, adjust the tax rate for the charges that are subject to the change.