In the Cloud POS Back Office, you have the option to set items to the ‘Store Default’ Tax Rate. If you do this, the item will respect the default Tax Rate set for the location in which it is sold. (The default Tax Rate for a store is configured from ‘Setup > Stores’.)

However, if you also have variations in tax by item type / item price, the ‘Store Default’ setting alone may not meet your needs. You may have different Tax Rates for clothing vs. bikes, for example, which also vary from store to store. In this scenario, you can make use of the Variable Tax Rates setup.

Variable Tax Rates are also useful if you have tax holidays at certain times of year, as you can easily activate/deactivate the rules as appropriate.

This article covers the following topics:

• Creating and editing Variable Tax Rates
• Checking the Variable Tax Rates for items
• Using Variable Tax Rates for tax holidays
• Frequently Asked Questions

Creating and editing Variable Tax Rates

1) In the Cloud POS Back Office menu, navigate to Setup > Variable Tax Rates:

This will take you to the page where you can create your Variable Tax Rates.

Please note that:

• These rules will only apply to items that are set to use the ‘Store Default’ Tax Rate.
• If no Variable Tax Rates are found that are relevant to the item, then the ‘Store Default’ Tax Rate would be applied
• If an item meets the criteria for multiple Variable Tax Rates, Cloud POS will decide which rule to apply in order of specificity:
  • Rules for the item's Category would take precedence
  • If no Category rule exists, then rules for the item's Department would take precedence
  • If no Department rule exists, then rules for ‘All Items’ would be applied

2) To create a new Variable Tax Rate, click Add New Variable Tax Rate:

This will open a window where you can create your Variable Tax Rate.

3) You need to populate the fields as follows:

• Description: This is a name for your Variable Tax Rate. Choose a Description that will help you and your colleagues to understand the purpose of the Variable Tax Rate in future.
• Active: This checkbox will be selected by default. If you do not want your rule to become active yet, you can uncheck this box. Variable Tax Rates can be activated / deactivated at any time, but changes can take up to one hour to apply in the Point of Sale.
• Store: Choose the store where the Variable Tax Rate applies.
• Tax Rate: Choose the Tax Rate that you want to apply to the item if the conditions are met. If you need to create a new Tax Rate for this purpose, please refer to the following article: How do I manage my Tax Rates?
• Minimum Price: The minimum price of item that the Variable Tax Rate should apply to. Please note that this is applied based on the price of the item as sold in the transaction (please refer to the Frequently Asked Questions for more information).
• Maximum Price: The maximum price of item that the Variable Tax Rate should apply to. Please note that this is applied based on the price of the item as sold in the transaction (please refer to the Frequently Asked Questions for more information). The maximum value you can enter is 9,999,999.
• Department and Categories: Choose if you would like this Variable Tax Rate to apply to ‘All Items’ sold at this store (within the price range you have specified), items within a particular ‘Department’ or items within a particular ‘Category’.

When you are ready to proceed, click Save. Here is an example. Please note that this is not accurate to real-world tax regulations.

Once your Variable Tax Rate has been created, you will see it displayed in the table. This will also show you the resulting Tax % and the date that the Variable Tax Rate was last updated.

Repeat steps 2 and 3 until you have created all the Variable Tax Rates you require. 

Here is an example setup, with an explanation of how the rules would impact the taxes charged. (A red line has been drawn to separate the rules for the two stores.) Please note that this example is not accurate to real-world tax regulations.

Let's look at the rules for the Boston store first.

Firstly, we have a rule that applies to children's clothing sold at this location. This Variable Tax Rate dictates that any item from the Category ‘Children’s Clothing' will have the ‘Tax Exempt’ rate applied (0%), regardless of price.

Next, we have a rule that applies to the ‘Clothing’ Department as a whole, but only for items below $175 in price. These items should also use the ‘Tax Exempt’ rate (0%).

The final rule for Boston tells us that bikes sold at $1000 and over are subject to Luxury Goods Tax. These items should use the Tax Rate called ‘Luxury Goods Tax Boston’, which is a rate of 5%.

Now let's consider the rules for Tucson.

Our first rule is the same as one of the rules for the Boston store. All children's clothing is also subject to the ‘Tax Exempt’ rate (0%), regardless of price.

Then we have another Variable Tax Rate for bikes sold at $1000 or more. Again, these are subject to Luxury Goods Tax, but the rate in Tucson is different (it is 4% rather than 5%).

Here are some examples of how these Variable Tax Rates would affect the items sold.

This item is sold for $50 in the Boston store. It is part of the ‘Clothing’ Department, but not in the 'Children's Clothing' Category. It has the ‘Tax Exempt’ rate applied (0%):

This item is sold for $1500 in the Boston store. It is part of the ‘Bikes' Department, and it is over the $1000 price threshold, so the 5% tax for ‘Luxury Goods Boston’ is applied. We can see this in the transaction summary panel and in the further item details:

Checking the Variable Tax Rates for items

You can also view the Variable Tax Rates that will be applied to any item set as ‘Store Default’ by viewing the item record.

Click View Store Taxes to open the information window.

This window displays the Variable Tax Rate results for every store. Here, for example, Cloud POS explains that this item will be Tax Exempt when sold in Boston, but subject to the usual Store Default Tax Rate if sold in Tucson:

Using Variable Tax Rates for tax holidays

Variable Tax Rates are an efficient way of managing temporary tax holidays. You can create a Variable Tax Rate and activate it for the duration of the tax holiday, and then deactivate the rule when the tax holiday ends.

To create one or more Variable Tax Rates for this purpose:

1) First, make sure you have a suitable Tax Rate in Cloud POS on the ‘Setup > Tax Rates’ page. You will need a Tax Rate with the appropriate percentage.

2) Create the Variable Tax Rate for your tax holiday, following the instructions in the section above. If your tax holiday has not started yet, make sure you uncheck the ‘Active’ box for now.

Here is an example:

Here, items from the ‘Accessories’ Department sold in Boston at up to (and including) $100 will be tax exempt while this Variable Tax Rate is active. Note that the ‘Active’ setting has been left unchecked for now.

3) When your tax holiday begins, you can click to Edit the Variable Tax Rate, check the Active box and Save.

4) When your tax holiday ends, you can click to Edit the Variable Tax Rate, uncheck the ‘Active’ box and Save.

The Variable Tax Rate will then be available the next time the holiday comes into effect. The settings can be amended each time, if needed.

Frequently Asked Questions

Where is the ‘Store Default’ Tax Rate set?

To configure the Store Default Tax Rate for one of your stores, navigate to ‘Setup > Stores' in the Cloud POS Back Office menu.

Click ‘Edit’ beside the store you wish to amend/check.

Scroll to the ‘Tax Setup’ area. Here you can view the current Store Default Tax Rate for this store and change it if required.

Click ‘Save’ at the bottom of the page if you make changes.

 

 

Which price is respected for Variable Tax Rates?

For Variable Tax Rates with minimum/maximum prices set, the price is checked against the price in the Point of Sale. In other words, the Variable Tax Rates will be applied according to the value set here:

It does not matter if this is an unchanged ‘Price’ from the item record, a preset ‘Sale Price’, a discounted price achieved through volume discounting, a discounted price achieved through an item line discount or a discounted price achieved through a transaction discount. Regardless of how this price has been arrived at, it is this value that will be checked when determining which Variable Tax Rate to apply.

 

 

How can I set items to use the Store Default Tax Rate (and Variable Tax Rates)?

There are two ways to set items to use the Store Default Tax Rate. Any items set to use the Store Default Tax Rate will also respect the Variable Tax Rates.

a) You can set this on individual item records:

 

b) You can set items to use the Store Default Tax Rate in bulk, using the Modify Item Detail Wizard.