2025 February - Tax Updates

2025 February - Tax Updates

Info
This is an article extension from the 25.02.04 web release notes

Tax Updates Overview

Currently, a single 'Default' tax rate may be set to apply to all flight legs of all quotes (unless overridden by a custom Contract entry). Commonly the default would be the US FET and when not applicable could be manually removed or changed to an alternate tax rate on the Quote itself. The FET Passenger Segment Fee is captured separately on the tax management page and also always applies to all flight legs, but is not visible or editable from the Quote. The "State Tax" also sits outside the tax table, is applied to all flight legs but not visible, and uses a separate toggle mechanism to apply on line items. We recently added the ability to apply multiple tax rates to a flight or line item, which allowed for some new flexibility for the tax field.

These additional updates for taxes will deliver:
  1. Standardized tax management and application process for all tax types, including: % rates, per passenger fees, and custom rates for select Contracts. 
  2. Ability to create/apply different passenger fees under the tax structure* with different currencies. 
  3. Automate taxes for flight legs based on the itinerary departure and arrival. 
  4. Set one or multiple default taxes for flights and/or line items. 
  5. Full visibility and ability to edit all taxes applied on a Quote. 
  6. All new tax functionality is supported in other areas on the application through the contract, quoting, and invoicing process.
Notes
*These per passenger taxes have often been built using a Master Line Item, which will continue to work / be a viable option; however, using these new tools will allocate those charges as a tax.  


Tax Table Features

Finance > Settings (tab) > Taxes (tab) > Taxes (side-tab)
  1. Taxes that had previously been outside have been moved into the table. This includes:
    1. If the State Tax value was greater than 0 at the time of release, then a percentage tax named 'State Tax' with that value will be auto-created.
    2. If the FET Passenger Segment Fee was greater than 0 at the time of release, then a passenger tax named 'FET Passenger Segment Fee' with that value will be auto-created.
    3. If any Contracts had Taxes = Custom and the value for either the Pax Segment Fee and/or the State Tax was greater than 0 at the time of the release, then the appropriate unit tax will be auto-created with that value starting the name with "Contract". If there are multiple Contracts using the same tax values, then the Contract tax with that value will only be created once. 
  2. When creating a tax, there is an option to select between a Percentage unit and a Passenger unit. 
    1. If Percentage is selected, the tax will be the percentage of the value entered of the total charge. 
    2. If Passenger is selected, the tax will be the value entered in the currency select times [x] the number of pax indicated for the flight leg. 
  3. Passenger unit taxes will have the option to select the currency only if the Base Currency has been set for the account. If the Base Currency has not been set, then all Passenger unit taxes will be applied in US Dollar ($USD).
Tax table now supports all taxes in one place


Creating a Percentage tax


Creating a Passenger tax with a currency selection (Base Currency is set)



New Tax Configurations 

Finance > Settings (tab) > Taxes (tab) > Configurations (side-tab)
​
Introducing the ability to automate the application of taxes, including conditionally based on the itinerary. 
  1. Tax Configurations will be auto-created during deployment to replicate current behavior. Configurations named 'Default for Flight Legs' for flight legs and 'Default for Line Items' for line items will be created, applying 'Always', and include the Default tax (if setting was selected), the State Tax if the value was greater than 0 at the time of deployment, and the FET Passenger Segment Fee for flight legs only if the value was greater than 0 at the time of deployment.
  2. Custom Tax Configurations may be created that apply to flight legs or line items. 
    1. If for flight legs, then the Passenger unit taxes may be used and applying based on itinerary conditions is available.
    2. If for line items, only Percentage unit taxes may be used and only for always applying automatically. 
  3. Flight leg conditional application must have a 'From' selection and a 'To' selection. Possible selections include countries, US states, Canadian Provinces, airports, and other unique designations such as 'Anywhere' and the '225 Mile Zone'. These are the same selections as the Master Line Item, Itinerary conditions. 
    1. The itinerary may be fixed as a From>To, or by selecting Bidirectional = Yes will operate in either direction: From<>To
Notes
Configurations STACK! If a flight itinerary is applicable to multiple tax configurations, then the taxes from all applicable configurations will be applied. 

Tax Configuration management page


Flight Leg configuration with Conditional automation


Line Item configuration, must Always apply



US Tax Use Case

The Tax Configuration feature was built with flexibility in mind for many use cases, but the most commonly requested is the appropriate application of the US FET and Passenger Segment Fees.
  1. Remove the FET and the Segment Fee from the 'Default for Flight Legs' configuration; then
  2. Create the 3 configurations outlined in the table below. 
If there are any questions on this or how to structure other tax rules, please feel free to reach out to your Account Manager.




Other Affected Areas

Once taxes are setup per your needs and requirements, they are ready to be put to use in the rest of the application. There also have been some adjustments in other areas of the application to support the updates to taxes. 

Taxes on Quotes

  1. When a Quote is created or edited, if the itinerary matches a tax configuration condition (or an 'always' configuration exists), then those taxes will be applied to the flight legs and/or the line items. 
  2. If the Contract for the Quote has Taxes = Custom, then those taxes will be applied as selected in addition to all the matching configuration taxes.  
  3. Segment Fees or Passenger unit taxes will also be visible in the Tax field on the flight legs. 
  4. Once a quote has been created and taxes may or may not have been applied, all remain editable. However, if there are changes to the itinerary that trigger the tax configuration to rerun any manual adjustments/edits may be lost. 
Notes
Taxes will still only apply to Retail quotes. If the quote is Wholesale, no taxes will be applied.

Segment Fees, or Passenger unit taxes, are now visible and editable on the Quote


State Taxes on Master Line Items

Previously the State Taxes could only be applied by a separate toggle available on the Master Line Items. Now that multiple taxes may be added to the Tax fields, and the State Tax has been merged into the tax table, the control for this has changed. What was previously the State Tax toggle is now the 'Use Tax Configurations' toggle. Whatever value the State Tax toggle was before deployment for the Master Line Item will be the same value for 'Use Tax Configurations' after deployment. 
  1. If 'Use Tax Configurations' = No, then any tax configurations for Line Items will NOT be applied.
  2. If 'Use Tax Configurations' = Yes, then any tax configurations for Line Items WILL be applied. This includes the auto-created 'Default for Line Items' configuration with the State Tax if the value was greater than 0 at the time of deployment. 
  3. Any Taxes entered in the 'Tax' field on the Master Line Item will still always be applied. 
On a Master Line Item 


On a new Country Line Item


On an existing Country Line Item 


Custom Tax Rates on Contracts

As mentioned above, if Taxes = Custom on a Contract those rates will be auto-created in the tax table and editable from the tax settings. Those rates will also still be applied to the Contract in the new method, so there should be no difference in quotes produced before and after these updates. 
  1. Custom taxes on Contracts will override any Tax Configurations for 'Always' only. Conditional Tax Configurations will still stack.
  2. Added ability to apply multiple custom tax rates to a Contract. 
  3. Added flexibility to definite the tax application per flight leg and/or line item. 
  4. When creating/editing a Contract and toggling over to Taxes = Custom, it will pre-populate with the 'Always' configuration taxes for ease of use.

Comparison of the legacy location and method of taxes on Contracts vs the new model


Taxes on Invoices

The visibility and support for multiple tax rate application is persisted through the invoicing process. 

New tax model supported on the Invoice

 

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