SHARE
Understanding the Difference Between Service Charge and Service Tax in Restaurants
Team ESB
Have you ever noticed that your restaurant bill often exceeds the price of the food listed on the menu?
This happens because of additional charges, such as service charge and service tax, imposed on customers. But what exactly is the difference between the two?
In this article, ESB will dive deeper into the details of service charges and service taxes.
What Is Service Tax?
Service tax, or restaurant tax, is a tax set by the government and managed by local governments. According to Law No. 28 of 2009 on Regional Taxes and Regional Levies, this tax is based on the amount paid to the restaurant.
As outlined in Article 39, the tax rate can be as high as 10% of the total transaction, as regulated in Article 40 (1). Restaurants are required to remit this tax to the local government as a contribution to regional revenue.
It’s important to note that service tax differs from Value-Added Tax (VAT):
- Service Tax: Managed by local governments.
- VAT: Managed by the central government through the Directorate General of Taxes.
Currently, the VAT rate is 11%, based on Law No. 42 of 2009, amended by Law No. 7 of 2021. The rate is scheduled to increase to 12% no later than January 2025.
Understanding this distinction allows restaurant and culinary business owners to better evaluate their bills and tax responsibilities.
What Is Service Charge?
Service charge is an additional fee set by the restaurant as appreciation for the services provided.
Unlike service tax, service charge is not regulated by the government and depends entirely on the restaurant's policy.
Typically, the service charge ranges between 5% and 20% of the total bill.
Example:
If the total bill is Rp300,000 and the service charge is set at 10%, the additional cost would be Rp30,000.
Read more: No App Needed! Check Out 3 Ways to Scan QR Code Menus from Your Smartphone
Key Differences Between Service Tax and Service Charge
Here is a comparison between service tax and service charge:
How to Calculate Your Bill
Suppose a customer dines at your restaurant, with a total bill of Rp200,000. If the restaurant applies:
The calculation would be:
Why Is Service Charge Important?
Service charges play a vital role in restaurant operations, including:
1. Replacing Tips
Ensuring restaurant staff receive fair compensation without relying on customer tips.
2. Maintaining Financial Stability
Service charge revenue is used for staff salaries, facility maintenance, and service improvements.
3. Motivating Staff
Encourages staff to deliver excellent service, as higher service quality could lead to increased service charge revenue.
Tips for Identifying Service Tax and Service Charge on Restaurant Bills
Some restaurants might not explicitly label "service charge" or "service tax" on their bills. Instead, they may use symbols like “++,” indicating that the listed price excludes these charges.
Read more: New! VAT Invoice Number: An Easy Solution to Monitor Invoice Numbers and Tax Reporting
Closing
Understanding service tax and service charge is essential for ensuring accurate restaurant billing.
For restaurant owners, ESB Core simplifies the management of service tax and service charge automatically, allowing you to focus on delivering the best service to your customers.
Key features, such as the VAT Invoice Number, offer benefits like:
- Controlling and utilizing tax invoice numbers from the Directorate General of Taxes (DJP).
- Generating automated, regulation-compliant financial reports.
- Reducing the risk of manual errors.
Optimize your culinary business with ESB Core and manage your taxes and operations more efficiently!
SHARE
