As you run a hosting business in a particular country, you should set taxes to conform to legal standards of your country. Parallels Customer and Business Manager lets you achieve this through tax rules and taxation policies. The diagram below shows the relations between these entities and plans.
A tax rule defines a tax for a particular country or sub-national unit where you offer your plans. For example, if you serve the American customers from states with different sales tax rates, create a separate tax rule for each state and specify their rates in these rules. The rates can be either fixed ($10) or progressive (15%). Business Manager calculates fixed rates in the currency of the online store where you sell the plan.
There are two types of tax rules: stackable and non-stackable. Stackable rules are applied to a subscription price, while non-stackable rules are applied to a total of the price and stackable tax rules values. To see an example of stackable and non-stackable rules application, refer to the Applying Taxation Policies section.
A state or a province where the rule applies can be a two character state abbreviation or a combination of a two character state abbreviation and city. You can also add a county name. In this case, separate location parts by dashes (-). For example, use state-city to specify a particular city in a certain state. The other accepted locations are: state-county, state-city-county, state. Set the state to asterisk (*) or leave the corresponding field blank to apply the rule to the whole country.
A taxation policy links together tax rules and plans to which you want to apply them. For example, to serve the American customers, create a taxation policy that contains all US tax rules and apply it to the plans you intend to sell in the US. If you offer the same plans to all customers, simply modify the default taxation policy and apply it to all plans.
Note: Each plan can have only one taxation policy applied. If you apply a new taxation policy to a plan, the existing one will be replaced.
To add new taxation policy or manage existing ones, go to the Business Setup > All Settings > Taxation Policies screen.
If a plan is associated with a taxation policy, the system searches for matches between subscriber location and tax rules included in the policy. If the system finds the matches, it will calculate the total tax due from rates of matching tax rules.
To calculate the total taxes due for a subscription to a plan, the system uses the following algorithm:
For example, a subscription price is $100, and the matching tax rules are as follows:
Rule 1: Apply 10% stackable
Rule 2: Apply 20% stackable
Rule 3: Apply 5% non-stackable
Rule 4: Apply 10% non-stackable
Then the total taxes due is calculated in the following way:
$100 * 0.10 = $10 (for Rule 1)
($100 * 0.20 = $20 (for Rule 2)
$10 + $20 = $30 (subtotal for stackable rules)
($100 + $30) * 0.05 = $6.5 (for Rule 3)
($100 + $30) * 0.10 = $13 (for Rule 4)
$6.5 + $13 = $19.5 (subtotal for non-stackable rules)
$30 + $19.5 = $49.5 (total taxes due)
To learn how to set up taxation for particular countries, see the examples below.
If you sell your plans to the US market, apply the sales tax. The sales tax is non-stackable, and its rate differs depending on the state where you sell plans.
To serve customers from the New York, Pennsylvania, and New Jersey states, create a taxation policy (for example, "USA Taxation"), apply it to the plans you are going to sell in the USA, and create a separate non-stackable tax rule for each state.
To set up a sales tax:
Important: The rates in the example may differ from actual rates. To get the relevant information on taxation in the United States, consult your local authorities.
If your business is located in Germany and you serve customers from the European Union, apply the value added tax (VAT). The VAT is non-stackable, and its rate differs depending on the seller location.
To set up the VAT:
After you add the VAT, configure the Business Manager to comply with EU business standards as described in the section Achieving EU Business Compliance.
Important: The rate in the example may differ from actual rate. To get the relevant information on taxation in the European Union, consult your local authorities.
If you run your business in the Quebec province, Canada, apply two taxes:
To set up the Quebec taxes:
Important: The rates in the example may differ from actual rates. To get the relevant information on taxation in your province, consult your local authorities.
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