Overview

What is Stripe Tax

Stripe Tax is an add-on feature for existing Stripe users that assists in collecting and filing taxes for countries where they conduct sales. It calculates tax based on the customer’s location (country/state), collects the amount, and provides a report detailing how much the business owes to each jurisdiction.

Why Do You Need Stripe Tax?

Stripe Tax supports 50 countries and all US states. Many of these territories require businesses selling to their residents to pay taxes. By using Stripe Tax, you can ensure compliance with these requirements.

How Does Stripe Tax Work?

Enabling Stripe Tax

• Visit the Stripe Dashboard and navigate to the Tax section.
• Click the “Get Started” button to trigger an eligibility check.
• Stripe will analyze your transactions for the year and provide a report on the territories where you’re eligible to collect taxes.

Understanding Tax Calculations

• Tax is calculated based on the customer’s location and the tax code of the product.
• You can choose to include or exclude tax from the price in the Tax settings (refer below).

Important Settings

1. Product and Prices
   • Preset product tax code: Determines the product category, influencing the tax amount.
   • Include tax in prices: Decide whether to include tax in the displayed price.
2. Integration Options
   • Dashboard transactions: The simplest way to enable the feature, affecting Stripe Checkout.
   • Other methods: Require integration tweaks to work with the Tax feature.

Supported Countries

Refer to the official Stripe documentation for a complete list of supported countries where you can monitor and collect taxes through Stripe.

Starting Tax Collection

1. Activate the Tax feature and review Stripe’s monitored report.
2. Attach a business registration to each territory that has met the threshold.
3. Once registrations are added, Stripe will automatically start calculating and collecting taxes for dashboard transactions and Stripe Checkout.
4. For custom integrations, update your code to calculate, display, and collect tax during payment.

Filling Tax Returns

As the account owner, you’re responsible for filing tax returns in registered countries. Stripe provides a report as part of the Tax feature to assist you.

The Fees

1. When using Stripe Checkout: 0.5% of the charge.
2. When using API:
   1. $0.50 for each completed transaction
   2. $0.05 for each calculation call

Notes for Connect users

If you’re charging an application fee, the tax will not impact your revenue.

Notes on custom integrations

1. Your checkout process needs to calculate the tax and send the information to Stripe.
2. You must capture the customer’s country and, for US customers, their postal code.

By implementing Stripe Tax, you can streamline your tax collection and reporting processes, ensuring compliance with various tax jurisdictions while focusing on growing your business.