Changing Tax Rates

Occasionally the rate of sales tax businesses are required to charge will vary over the years. This guide demonstrates how to handle such VAT rate changes in WHMCS.

Preparing for Tax Rate Changes

The tax rate is determined at the point an invoice is generated, so be ready to make the changes described herein at the deadline (typically at midnight).

The new rate will apply to invoices generated after the change; existing invoices will keep the previous rate.

Executing a Tax Rate Change

For the purposes of this example, the German VAT rate (known as USt) is decreasing to 16% on 1st July 2020.

This means that at midnight on 30th June,  you should update the tax rules so that new orders and invoices use the higher rate:

1. Navigate to Setup > Payments > Tax Configuration

2. Click the Tax Rules tab:

Click the Tax Rules tab

3. Delete the original tax rule by clicking the corresponding red delete icon:

4. Create a new tax rule with exactly the same name, country and state but enter the new tax rate:

5. Click Add Rule

Any invoices that the system generates from now on will use the new tax rate, any existing invoices will keep the old tax rate.

Bulk Tax Rate Changes

If you have multiple separate rules this method can be  time-consuming, so you can do this in bulk by running an SQL update  query on your WHMCS database via a tool such as phpMyAdmin:

UPDATE tbltax SET taxrate=16 WHERE taxrate=19;

This won't affect existing invoices and will keep the 19% tax  rates they had when the system generated them. Any invoices that the system generates after the change will use the new lower 16% tax rate.

 

If you also wish to update existing but unpaid invoices generated before the 1st July but due on or after it, then you can use this query:

UPDATE tblinvoices SET taxrate=19,tax=subtotal*0.16,total=subtotal+tax-credit WHERE status='Unpaid'
AND taxrate=17.5 AND duedate>='2020-01-07';

Subscriptions and Tax Rate Changes

If you are operating in Exclusive tax mode, or have the Deduct Tax Amount option enabled, VAT rate changes may result in a new invoice total compared with the previous invoice. This will have an impact for those clients paying via a fixed amount subscription agreement - such as those offered by PayPal and 2Checkout.

This will require manual intervention in order to ensure clients are paying the correct new amount. If you know this will affect you, I recommend cancelling and creating a new PayPal subscription from the next invoice issued to avoid any overpayments or interruptions in service.

Further Reading

WHMCS are not tax experts, and would strongly recommend anybody with any questions or concerns regarding tax rate changes seek appropriate advice from your local Tax and VAT Authority.