This article will walk you through the process of creating taxes and fees on your myfrontdesk account. It also explains the difference between exclusive/inclusive taxes and how to link your taxes and fees to items/sources.
Enter all the taxes and fees you charge on this page. This should include any sales, state or federal taxes, or any other taxes you may charge on top of a room night or a sold product.
Login to your myfrontdesk account:
1 - Click on the manage gear icon to go to the settings menu
2 - Under Property Configuration section, click on 'Taxes and Fees' tab
3 - +New Tax or Fee
1. Select whether you are adding a tax or a fee
2. Set whether the tax/fee is for items or reservations. You can check both boxes if it applies to more than one.
3. Name the tax/fee. This is public facing and seen by guests on their reservation summary, invoice, and folio.
- The text entered appears on mybookings. If you would like the text translated to the language in which the guest is viewing the bookings page, enter the translation of this text for each language. Leaving it empty for that language will show the same text as your main application language.
4. Code: Optional and for internal use. These are often issued by state or federal governments.
5. How is your tax/fee calculated? Exclusive or Inclusive
6. Select the Type of your Tax/Fee
7. Amount: Up to 5 decimal places are currently supported. (Example: 15.50511%)
8. If it's a Tax, the system displays an extra option which allows you to configure if this tax should be charged on top of any fees.
- If you select "YES" a CHARGED ON box will appear to the right. Use this to select which fees this tax will be added to.
- If you select "NO" that is all you need to do.
Click on Save button when you are finished!
NOTE: By creating a tax you are not automatically applying it to your rates, so this needs to be done separately. You should link your taxes and fees to your reservation sources.
Please see the following article to learn more:
* Applying Taxes and Fees To Reservation Sources
To link your taxes/fees to an item/product, see the section below "Linking Taxes and Fees to an Item."
There are few ways to set up and calculate your taxes and fees:
When the tax/fee is not included in the rate
If you enter a rate of $100 and set up a tax of 10%. The guest will pay $110. This is because the tax/fee is not included in the rates you have entered. Your 10% tax has been added to the rate.
- Room Rate set: $100
- Tax: 10%
- Room Rate: $100
- Tax: $10
- Total: $110
When the tax/fee is included in the rate
If you enter a rate of $100 and set up a tax of 10%. The guest will pay $100 because the tax/fee is included in the rate. They will see on their booking summary that 10% of the $100 they paid was the tax.
- Room Rate set: $100
- Tax: 10%
- Room Rate: $90.91
- Tax: $9.09
- Total: $100
Here is another example of the difference between exclusive/inclusive taxes and how it appears on guest's folio.
Wait, shouldn't the tax collected be $10 instead of $9.09? $10 is 10% of $100
The answer is No.
By setting the tax as inclusive, the system takes your total room rate of $100 and then calculates what the rate would need to be to reach the total of $100 when a 10% tax is applied. In this example, the inclusive tax is calculated as 10% of the actual room rate (10% of 90.91, which adds up to 100) Okay. Can I see the formula? Sure, here:
- Tax excluded price = total item price / ((tax rate /100) + 1 )
- 100 / ((10/100) +1 ) = 90.91
I still don't get it!
For a detailed article about calculating inclusive and exclusive tax, you can read this one from an accounting website.
Per Person/Per Night option means that the number of adults and children is multiplied against the number of room nights.
If this type is selected, you can choose whether this tax/fee should be applied to adults only or adults and children (it's not possible to create only for children)
For each check box selected, the system will display a field to enter the tax/fee value, so the amount for children can be different from adults.
- Currently it will only be offered as an exclusive tax/fee
- It's not possible to apply the 'per person per night' reservation's tax/fee only for children. The user needs to apply it for Adults + Children or only for Adults
- Only a fixed amount will be allowed
- The “per person per night” tax/fee can only be calculated for reservations at this time
Setting Max Length Rule
You also have the ability to set a max length. If yes is selected, you can add a max length of nights - it means that the tax will only be calculated for a specified number of days.
After this, the tax would stop applying.
The system will calculate the percentage of the tax/fee based on the total amount of each daily rate.
Please consider that:
- This type can be Inclusive or Exclusive.
- If it's a tax, the system allows you to charge this tax on top of any existing fee.
Here is an example of a 10% exclusive fee of total amount
The system will apply a fixed amount of the tax/fee under each room night/item. It can also be an inclusive or exclusive tax/fee.
This type of fee/tax can be only an exclusive tax and the system will apply a fixed amount based on the number of accommodations existing in the reservation.
If you have 2 accommodations under the same reservation, the system will apply the tax twice on the guest's folio, regardless of the room nights quantity.
Here is an example: This reservation has 2 accommodations.
This type of fee/tax can only be exclusive and the system will apply a fixed amount to each reservation.
If you have 2 accommodations under the same reservation, the system will apply the tax once on the guest's folio, regardless of the room nights quantity or number of accommodations.
Rate-Based Tax, or Dynamic Tax, helps to serve the properties who are required to charge the GST tax according to the law (for example, in India). This tax percentage is calculated depending on the nightly room rate. In myfrontdesk you can easily setup this tax type by adding several rate rules
For detailed information on how to setup this tax type, please check this article: Rate-Based Tax (Dynamic Tax)
By default, when you set up a deposit in myfrontdesk the taxes and fees you have set up will not automatically be included. When a property sets their deposit to 100%, the deposit is collected only for the room rate, and does not account for any taxes or fees. If you would like the amount of the taxes and/or fees you have set up to be included as part of the deposit amount, follow the steps below.
1 - Click on the"manage" gear icon to go to the settings menu
2 - Click on 'Policies' tab under Property Configuration section
3 - By choosing Percentage or First Day Price options, the system will display an option for you to Include taxes and fees specified as part of the deposit
Adding an exclusive tax/fee directly to reservation means that you need to calculate the amount of the tax/fee manually. To learn how to do it, please, refer to this article from our Knowledge Base: Adding exclusive tax/fee to a reservation
To learn how to set up the system to add and calculate the taxes/fees automatically for specific sources, please check this article: Applying Taxes and Fees to Specific Sources
Please note that once the tax/fee is set up and saved, you will not be able to edit the 'type'.
In this case, the solution is to create a new one.
- Click on the pencil icon to edit an existing tax/fee (remember that you will be able to edit everything, except the tax/fee type).
- Click on the X to delete it
Deleting a tax or fee will only apply to new future reservations. It will not apply to all the transactions and reservations that already exist within the system.
If you are updating existing taxes/fees after you have gone live the following warning might appear:
Select the option that you want to apply to your property and click on continue.
Taxes and Fees:
In the invoice summary at the top of the invoice the taxes and fees are always separated.
By default the system will show the total amount of all taxes types on the invoice summary (at the top of the invoice) (1) and each tax transaction in the invoice body (2)
But you can enable the option to show breakdown of each tax type at the top of the invoice too.
To do that go to Invoicing > enable an option "Show tax specifics on the invoice".
Taxes are a financial charge or other levy imposed upon a taxpayer, contribution to state revenue.
Example: VAT(USA), IVA(Europe), ISS(Brazil)
A Fee is charge in exchange for services.
Example: Cleaning Fee, Booking Fee