Bizoneness: Taxes in SAB B1: Introducing Sales tax, the Hawaiian GET, and Excise Taxes.

While in the US Income taxes are on many people's minds this week, there's another tax that makes a big splash more often: Taxes on goods and services.

For the following few newsletters, I will look at taxes in SAP B1. I'll start with Excise taxes, work through sales taxes, and finally get to VAT. First, I will briefly introduce sales and excise taxes and the granddaddy of them all, Hawaii's General Excise tax, or GET. We'll explore VAT and how to set up SAP B1 to handle VAT, excise, and sales taxes in later installments.

Sales taxes are taxes on the buyer, added to the purchase price at the time of sale. Sales taxes are usually local taxes on the province/state, county, or municipal level. You may have multiple sales taxes. Sales taxes are often, but not always, for the sales of goods, but not services. For some jurisdictions, services include content, so a magazine may not have a sales tax. Some items may have extra sales taxes. Environmental initiatives have put sales taxes on takeout cartons and non-reusable shopping bags. For example

Excise taxes are taxes directly applied to gross sales of a product. They are a tax on the seller, not the buyer. However, these taxes can be passed on to the buyer when possible. Excise taxes can be passed on as either flat rates or percentages. An example of a flat tax is the [U.S. gasoline tax](https://www.irs.gov/pub/irs-pdf/p510.pdf ) of $0.184 per gallon for fuel terminals. A percentage excise tax example of 7.5% for [Air transportation of people](https://www.irs.gov/pub/irs-pdf/p510.pdf ) Sometimes it is both. For example, [sport fishing rods and reels](https://www.irs.gov/pub/irs-pdf/p510.pdf ) have an excise tax of 10%, with a maximum of $10. Many of these taxes are passed onto consumers through added fees or made part of the product cost.

The State of Hawaii does not have a Sales Tax. Instead, it charges a [General Excise Tax](https://tax.hawaii.gov/geninfo/get/ ) on any revenue generated by a business with a regular presence in the state "for the privilege of doing business."

Depending on the item or service sold, The tax rate can be between 0.5 and 5%, and counties can add 0.5% to their retail GET of 4.0% for a total 4.5% tax for any revenue that isn't wages.

Most businesses that set the prices of their goods can pass on the GET to the buyer as if it were a sales tax. They can even bump it up slightly to 4.172% if passed on to the consumer. Most do, and that's the "sales tax" you'll find on receipts in Hawaii.

Yet those who get an unspecified amount can't do this. An author's royalties or an actor's residuals are not set by the person but by the distributor or company contracting, who gives a percentage or amount back to the maker. For example, a book author makes royalties on a book, or a YouTube creator makes some money by monetizing their videos. Both can't pass on the tax to YouTube or their publisher -- they have to pay it as a tax expense, though it is also deductible from their income tax.

Others, like Gig workers and restaurant staff under contract and not directly employed by a company, also pay GET on tips. Again, they cannot add the Get to the tips, so it comes out of their pocket.

Companies accrue excise taxes and pay them periodically. The period may be different for each excise tax, but it is generally Quarterly, semiannually, or annually.

I'm no accountant or tax attorney. This is a rough and brief introduction that provides enough background to implement these taxes in SAP B1. In the next newsletter, we'll introduce the Close sibling of the GET—VAT.