Tax Configuration

Taxes are one of the most regulated aspects of restaurant billing. Getting them wrong does not just create accounting headaches —it can lead to compliance issues, audit findings, and guest disputes. Veridien's tax configuration system is designed to handle the complexity of real-world tax jurisdictions, from simple single-rate setups to multi-layered structures where different taxes apply to different item types.

This guide explains the key concepts, walks through the setup process, and shows how taxes appear on guest-facing bills and internal reports.

Key concepts

Before configuring taxes, understand the four building blocks that Veridien uses to manage restaurant taxation.

Tax Rate is a single tax with a name, percentage, and type. Examples include "State Sales Tax" at 6%, "City Tax" at 1.5%, or "Service Charge" at 10%. Each tax rate represents one line of tax that might appear on a bill.

Tax Group bundles multiple tax rates together so they can be applied as a unit. A "Food Tax" group might combine State Sales Tax (6%) and City Tax (1.5%). When you assign the Food Tax group to a menu item, both taxes apply automatically. Tax groups simplify management —instead of assigning three individual tax rates to every item, you assign one group.

Inclusive vs. Exclusive determines how the tax relates to the menu price. An exclusive tax is added on top of the listed price. If a dish is priced at $20 and carries a 10% exclusive tax, the guest pays $22. An inclusive tax is already built into the listed price. If the same dish is priced at $20 with a 10% inclusive tax, the guest pays $20 and the tax portion ($1.82) is extracted from that amount for reporting purposes. Many jurisdictions require one approach or the other —check your local regulations.

Exemption removes a tax from specific items or situations. Some jurisdictions exempt non-alcoholic beverages from certain taxes, or diplomatic guests may be tax-exempt. Exemptions override the default tax assignment and are logged for audit purposes.

Understanding your tax setup

Before you create anything in Veridien, gather the following information from your finance team or tax advisor:

• Which taxes apply in your jurisdiction (state, city, county, tourism levy, service charge, VAT).
• What the rates are for each tax.
• Which items each tax applies to. In many jurisdictions, food and alcohol are taxed differently. Non-alcoholic beverages may have their own rate.
• Whether taxes are inclusive or exclusive of the menu price.
• Whether any exemptions apply (diplomatic guests, staff meals, certain item categories).

With this information, you can map your real-world tax structure onto Veridien's tax rates, groups, and assignments.

Setting up taxes

Creating tax rates

Repeat for each individual tax in your jurisdiction. Most restaurants need between one and four tax rates.

Creating tax groups

A common setup has two groups: one for food items and one for alcoholic beverages, since alcohol often carries additional taxes. Create as many groups as your jurisdiction requires.

Assigning tax groups to menu items

For efficiency, you can assign a default tax group at the category level. Navigate to the category settings and set a Default Tax Group. Every new item added to that category inherits the default. You can still override the default on individual items if needed (for example, a non-alcoholic cocktail in the Cocktails category might use the Food Tax group instead of the Alcohol Tax group).

How taxes appear on bills

When a guest receives their bill, taxes are displayed clearly below the subtotal. The exact presentation depends on your tax type (inclusive vs. exclusive) and your bill format settings.

Exclusive taxes

For exclusive taxes, the bill shows:

• Subtotal: The sum of all item prices before tax.
• Each tax line: Listed individually with the tax name and amount. For example, "State Sales Tax (6%): $12.00" and "City Tax (1.5%): $3.00."
• Total: The subtotal plus all taxes.

Guests see the full breakdown and can verify each tax amount.

Inclusive taxes

For inclusive taxes, the bill can be displayed in two ways depending on your configuration:

• Simple display: The total is shown as a single number (the menu prices already include tax). A note at the bottom states "Prices include applicable taxes."
• Detailed display: The total is shown along with a tax breakdown that extracts the tax portion from each item's price. The guest sees that of the $20.00 they paid for a dish, $1.82 was tax. This is required in some jurisdictions.

Configure the bill display format in Restaurant > Settings > Bill Format.

Tax reporting

Accurate tax configuration feeds directly into your tax reporting. Veridien generates the following reports:

• Tax Summary Report shows total tax collected over a period, broken down by tax rate. This is typically what you submit to tax authorities.
• Tax Detail Report shows tax collected on a per-transaction basis. Use this for audits or to investigate discrepancies.
• Tax Group Report shows totals by tax group, helping you see how much revenue came from food vs. alcohol and what taxes applied to each.

Access these reports from Analytics > Restaurant > Tax Reports. You can filter by date range, outlet, and tax type. Reports can be exported to CSV for your accounting system.

Handling exemptions

In some situations, taxes should not apply to specific orders. Veridien supports exemptions at the order level.

To apply a tax exemption, open the order and tap Tax Exempt before closing the check. Select the exemption reason (Diplomatic Guest, Staff Meal, Promotional Event, etc.) and confirm. The system removes the applicable taxes from the bill and logs the exemption with the reason, authorizing user, and timestamp.

Exemptions appear in the Tax Detail Report with a flag, so your finance team can verify that each exemption was legitimate during their review.

Scenario: three-tax jurisdiction setup

Your hotel restaurant operates in a jurisdiction with three taxes on food and beverages:

1. State Sales Tax —7% exclusive, applies to all food and beverages.
2. City Hospitality Tax —2% exclusive, applies to all food and beverages.
3. Alcohol Surcharge —3% exclusive, applies only to alcoholic beverages.

Here is how you configure this in Veridien:

Step 1: Create the tax rates. Navigate to Tax Rates and create three entries:

• "State Sales Tax" at 7%, Exclusive, Active.
• "City Hospitality Tax" at 2%, Exclusive, Active.
• "Alcohol Surcharge" at 3%, Exclusive, Active.

Step 2: Create the tax groups. Navigate to Tax Groups and create two groups:

• "Food & Non-Alcoholic" containing State Sales Tax (7%) and City Hospitality Tax (2%). Combined effective rate: 9%.
• "Alcoholic Beverages" containing State Sales Tax (7%), City Hospitality Tax (2%), and Alcohol Surcharge (3%). Combined effective rate: 12%.

Step 3: Assign to menu items. Open the menu editor. Set the default tax group for food categories (Starters, Mains, Desserts, Soft Drinks) to "Food & Non-Alcoholic." Set the default tax group for alcohol categories (Cocktails, Wine, Beer, Spirits) to "Alcoholic Beverages."

Step 4: Verify with a test order. Place a test order with one food item ($20) and one cocktail ($15).

• The food item should show: State Sales Tax $1.40 + City Hospitality Tax $0.40 = $1.80 total tax.
• The cocktail should show: State Sales Tax $1.05 + City Hospitality Tax $0.30 + Alcohol Surcharge $0.45 = $1.80 total tax.
• The bill total should be $38.60 ($35 subtotal + $3.60 tax).

Step 5: Review the bill. The guest's bill shows:

Grilled Chicken Breast         $20.00
Margarita                      $15.00
--------------------------------------
Subtotal                       $35.00
State Sales Tax (7%)            $2.45
City Hospitality Tax (2%)       $0.70
Alcohol Surcharge (3%)          $0.45
--------------------------------------
Total                          $38.60

Note that the State Sales Tax and City Hospitality Tax lines combine the amounts from both items, while the Alcohol Surcharge only reflects the cocktail. The guest sees a clear, accurate breakdown.

Step 6: Confirm reporting. After settling the test order, check the Tax Summary Report. You should see $2.45 under State Sales Tax, $0.70 under City Hospitality Tax, and $0.45 under Alcohol Surcharge. These numbers should match what appeared on the bill.

Void the test order when you are satisfied that everything is correct. Your tax configuration is now ready for live service.

With this setup in place, every order your restaurant processes will automatically calculate the correct taxes based on what was ordered. Servers do not need to think about tax rates —the system handles it. Your monthly tax filing becomes a matter of running a report and submitting the totals.