Handling tax rate changes in Mews Operations

AccountingFinanceLegal EnvironmentsMews OperationsRate Management

It is crucial to handle tax rate changes, such as VAT adjustments, correctly to ensure legal compliance and accurate financial reporting. When your local government announces a tax rate update, such as reducing the tax on F&B items, you need to inform the Mews Support team in advance. This ensures Mews adopts the new tax rate and updates all your open and unconsumed items with the new tax rate at midnight on the day the law comes into effect.

 

You can learn how to handle your city tax changes here.

 

Important: Do not close any bills that have the previous tax rates.

  • Prior to the tax change: If you closed a bill with previous tax rates and want to correct it, you need to rebate and create a new itemized bill. You can learn more about correcting a closed bill here.
  • On the day of the change: If you find an incorrect tax in the system, contact Mews Support as soon as possible. Mews cannot fix any items outside of your editable history window.

 

In this article, you can learn about:

 

Nights or rates

After Mews verifies an upcoming tax rate change that applies to accommodation, on the day the tax changes, Mews automatically adopts the new tax rate and updates all your:

  • future reservations with no closed nights or products on bills, including the items overlapping the day of the tax change, and
  • products and rates, if the new tax rate is applicable.

On the day of the tax change, you can verify whether the system adopted the new tax correctly.

 

To avoid affecting order items for previous reservations, you need to take specific steps. These steps differ depending on whether: 

 

  • If you either have Admin permissions or if you have both the “Manage accounting configuration” and “Manage property settings permissions”: 

    On the date of the tax rate change, you need to temporarily reduce the Editable History Window to the shortest possible duration and ensure it does not extend beyond midnight of the tax change day. For example, if the tax rate changed at 12 AM on January 1st, make sure your EHW is shorter than until 12 AM on January 1st.

    Note:

    • Avoid modifying past reservations while they are within your Editable History Window. This prevents updating the tax rate of previous nights.

    • Maintain a short editable history window until you check out all reservations overlapping the date of the tax rate change or until you pass the previous duration of your Editable History Window.

    • Ensure the configuration for automatic no-show cancellation works as expected. If you deselect Enable automatic no-show cancellation in the Visit options of your stay settings, Mews automatically cancels reservations marked as no-shows within the last 30 minutes before your operational history window ends. You can learn more about managing no-shows in Mews Operations here.

  

  • If you neither have Admin permissions nor do you have both the “Manage accounting configuration” and “Manage property settings permissions”:

    On the date of the tax change:

    1. You need to <split any reservations arriving before and staying over on the date of the tax change. For example, if a tax rate changes on the 1st of January, and a guest stays from the 28th of December until the 2nd of January, you need to split the reservation. Select the 1st of January as the split date. This shortens the existing reservation to 28th – 31st December and creates a second reservation from the 1st to 2nd of January. Note: You can only split checked in reservations.

    2. If you apply the tax rate on products, close all bills, including products with a consumption date up to the date the tax changes, as the previous tax rate applies.

    3. Check out all the reservations available to check out after splitting reservations. You can learn how to check out reservations using the Check-out report here. 

 

Products

If the tax rate change applies only to products or additional services, for example, the VAT increases for food and beverage products, you need to manually update the tax rate for these products, in each of your services using them.

 

On the day of the tax rate change: 

  1. In Mews Operations, go to the main menu  > Settings > Services.
  2. Select the service with products you want to update the tax rate for.
  3. Click Products.

 

  • For properties with a single taxation, for example, in countries using VAT:
    1. Click the  Update tax rates icon.
    2. Products: Select all your products using the tax rate you need to update.
    3. Tax rate: Select the new tax rate for the products selected above.
    4. Apply rate change to open product postings: Check this option to apply the tax change to all open and unconsumed bill items.
    5. Consumed after: Select the date and time to apply the rate change only to products your guests consume after this date. Note: Mews recommends selecting the date that the tax change comes into effect, at midnight, for example, select January 1st at 0:00 if the new tax change applies from the same date.



    6. Click Update. 

 

  • For properties with multiple taxations,for example, in USA:
    1. Click on the product for which you want to update the tax rate.
    2. Under the Tax rate section, select the new tax rate that applies.

    3. Click Update. 

 

Mews applies the new tax rate to all applicable bill items. Once you update the rate, you can verify whether the system adopted the new tax correctly.

 

There are two different approaches to reporting VAT to the authorities for the various legal environments, i.e., reporting VAT: 

  • on the day of payment or 
  • on the day of consumption.

 

In this case, close the bills and invoices for future stays the same day you charge the payment against the positive deposit, nights, or products. This ensures your bills and invoices have the currently valid VAT.

 

In this case, do not issue bills and invoices for future stays prior to consumption. issue bills and invoices for future stays prior to consumption. They have the current VAT, which can change on the date of consumption, resulting in an incorrect bill or invoice.

 

You can learn more about the FAQs on tax rate changes here. 

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