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2010-1Q: BILLING: Flexible Tax system

Setting up Tax Zones and Tax Rates
The first step to get the Flexible Tax System going is setting up Tax Zones. This can be done from the "Flexible Tax System" section under the "Settings" tab in SIMPLer.

Tax Zones


The top level category that has to be defined to encapsulate the tax rates. A Tax Zone represents a set of Tax Rates in the system and as such can be assigned to products / customer accounts / subscriptions. Each Tax Zone has the following attributes: 
    • Name - Name under which the Tax Zone will be represented in all "Tax Zone" dropdown menus across the system. This field is required.
    • Description - Description is not a required attribute. Should be used to store notes (if any).
Note: Once a Tax Rate is defined for a particular Tax Zone it cannot be deleted and it's name cannot be changed.


  • Tax Rates - subcategory of each Tax Zone. They define all the sub taxes that exist within a Tax Zone as each Tax Zone may have separate sets of Taxes. Each Tax Rate has the following attributes: 
    • Name - Name to represent the Tax Rate. This field is required.
    • Description - Description is not a required attribute. Should be used to store notes (if any)
    • Tax Zone - defines Tax Zone the particular Tax Rate is assigned to. This field is required.
    • Tax Rate - defines the effective tax rate in [%]. This field is required.
Note: Once the Tax Zone to which the Tax Rate is assigned is used at least once (it can be assigned to either a customer, product , subscription, or invoice), the Tax Rate cannot be deleted and it's Tax Zone assignment and Tax Rate cannot be changed anymore.
Tax Rates are used in the system to:
    • Calculate each Tax Zone's summary Tax Rate
    • Calculate and display the detailed Tax breakdown in the "Financial Totals" page

Product Tax Mode / Tax Zone Settings

Tax Zone and Tax Rate can now be setup on a 'per-product' basis. There are three Tax Modes:
  • Default - in 'Default' mode the summary Tax Rate is set as per the Operator Default Tax settings (this can be updated from the 'Modify WISP' page)
  • Fixed - in 'Fixed' mode the operator can specify the summary Tax Rate on a 'per product' basis
  • Flexible System - in the 'Flexible System' mode the operator can choose the 'Tax Zone' to assign to the product, the selected zone will be used to calculate the Summary Tax Rate and than to render the Tax Breakup on the Financial Totals page
Note: The 'Flexible System' option will be available ONLY if there is at least one Tax Zone specified


To view the exact Tax Settings hover over the 'Summary Tax Rate'  column for any entry in the products page as presented below.

Subscription Default Valid From and Subscription Default Valid To fields were also added while adding the Tax Settings on the 'Modify Product' page (see below). These settings can be used to create 'campaign products'. This addition is not related to the new flexible taxation system.



Customer Subscription Tax Mode / Tax zone settings
The effective Tax settings that will be used to create an invoice come from customer subscriptions. There are three Tax Modes the subscription can be in:
  • Default - in 'Default' mode the summary Tax Rate of a subscription is set as per product Tax settings
  • Fixed - in the 'Fixed' mode the operator can specify the summary Tax Rate on a per subscription basis overriding the product settings
  • Flexible System - in the 'Flexible System' mode the operator can choose the 'Tax Zone' assigned to the subscription, which will be used to calculate the Summary Tax Rate and than to render the Tax Breakup on the Financial Totals page. This overrides the product settings.
Note: The 'Flexible System' option will ONLY be available if there is at least one Tax Zone specified

To view the exact Tax Settings of a subscription, hover over any entry in the 'Tax / Vat Rate' column as presented below.



Below find a screen shot of the Modify subscription page with examples of Default, Flexible System and Fixed Tax Modes


Customer Default Tax settings
Customer accounts can be setup with the preferred Tax settings that will be used for each new subscription added to the system. Note that those default settings can than be altered. There are three Tax Modes the customer account can be in:
  • Default - in 'Default' mode each new customer subscription will default to the product settings
  • Fixed - in the 'Fixed' mode each new customer subscription will be set to 'Fixed' mode with 'Tax Rate' set to one specified in the customer account
  • Flexible System - in the 'Flexible System' mode each new customer subscription will be set to the 'Flexible System' with the 'Tax Zone' set to the one specified in the customer account
Note: The 'Flexible System' option will ONLY be available if there is at least one Tax Zone specified

 
VAT / TAX summary in Financial Totals



After billing has started and some entities are in the system (i.e. invoices, lodgements etc.) the subscription Tax Mode used to generate the invoices will have their reflection on the 'Financial Totals' page (accessible from 'invoices' page). The VAT/ TAX Breakup (see below) holds the summaries of each tax used in the billing process.
  • Tax summaries for invoice positions created from 'Default' or 'Fixed' subscriptions are represented in the VAT Summary as 'Fixed / Default TAX Rate System'. There will be a separate position for each Tax Rate used
  • Tax summaries for invoice positions created from 'Flexible System' subscriptions are further split across the Tax Rates that are defined for the Tax Zone. Each Tax Rate will be represented with a separate row in the VAT / TAX summary



 
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