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We just launched Stripe Tax, which automates sales taxes, VAT, and GST on your Stripe transactions. AMA!

Hi there! Kelly, PM and David, Tech Lead for Stripe Tax here! We just launched Stripe Tax to simplify tax compliance for startups and indie hackers like yourself.

Stripe Tax (https://stripe.com/tax) tells you when and where you need to collect tax and automatically calculates the right amount of tax during checkout. The product is currently in invite-only, but the long term goal is to help you offload ALL the hard work that is involved in collecting tax–from registering to filing and remittance. Happy to answer any questions you may have in the next hour!

  1. 10

    Are there any plans for doing something as Paddle does?

    I mean they handle VAT completely as they act as a reseller. Now with Stripe, you still have to solve all the MOSS sh*** on your behalf.

    That would be a huge step forward because micro/small businesses do not know how to deal with this.

    1. 4

      I replied to something similar below, so I'll reuse my response, I hope you don't mind:

      We don't yet offer a merchant of record service, although it can be a fit for certain users! In building Stripe Tax we realized, in many jurisdictions, you don’t need to collect sales tax from day one. However, MoRs do collect taxes on all your transactions immediately, so we found that startups who use MoRs often charge buyers more than needed.

      Our vision is to make tax compliance as simple as using a merchant of record, without needing to do so! Overall, we'd love to get your feedback as we're only getting started simplifying tax compliance. Shoot me a note anytime at [email protected]

      1. 2

        I hope what I said above makes sense. I have always wondered why Stripe chose this route of not going full MoR.

        "Startups who use MoRs often charge buyers more than needed". Nope. Not true. I would rather absorb the 18% GST or Sales Tax and not pass it on to the buyer rather than go through 100% loss in Regularizing each international invoice.

        The problem Stripe is doing with this approach is that it is only focusing on the point of sale. It is not bothered about what happens beyond that. That is where MoRs have the edge. Stripe is unable to see that once the transaction completes, the process is still not complete for the seller. The seller will still have to go through multiple legal hoops to get that transaction regularized and certified. Those cost more money than the transaction itself. Forget profits, you lose your full revenue in most cases. Which is why MoRs are charging a higher percentage in fees. Apart from handling taxes they become a reseller which is a huge huge plus point. Imagine the savings for the seller: absorbs the tax by making it inclusive of the price so customer doesn't feel the pinch, they don't lose nearly 100% of their money post transaction regularization, they just have to raise 1 invoice per month instead of 100s or 1000s of invoices for microtransactions, accounting becomes extremely easy etc. I don't mind paying Stripe 10% fees for this. That is how much I value MoRs. Stripe is losing a lot by not adopting MoR strategy.

        1. 5

          I think Kelly meant that (in some jurisdictions) small business are not required to charge tax on transactions if their annual revenue is below a threshold.

          For example UK businesses below £80k annual revenue don't need to charge VAT at 20%.

          But if you offload those transactions to a MoR then the tax gets charged regardless and so you must either charge the customer more or deduct it from profits.

          1. 1

            I understand that and it makes sense too. But unfortunately, that is as you and Kelly mentioned above, only available in few jurisdictions. But not all jurisdictions have the same laws.

            Stripe can do something similar to what 2Checkout does. It can retain what it already has for those businesses that want to take advantage of their local laws (like the example case you gave of UK businesses not needing to charge VAT below a threshold) while also providing an MoR for those that need MoR.

            2Checkout has 2Sell (which is what Stripe provides now) and 2Monetize (MoR). Stripe can have a subsidiary business that only handles MoR which charges a higher rate from sellers for providing this service.

            I have high trust in Stripe compared to any other payment processor. Which is why I would love to see them implement it. It is challenging no doubt but if anyone can pull it off correctly it would be Stripe.

            Currently, Stripe is available in private beta / preview in India from what I remember. But problem is that it is extremely generic that it doesn't solve the pain points experienced by entrepreneurs in India. Will list out the pain points:

            1. India has a vibrant payments ecosystem. From UPI to lots of wallets. Apart from credit/debit/net banking etc. People have gotten so used to making payments online that it has already become second nature. Especially with UPI (Unified Payments Interface). Stripe from what I know, only accepts debit/credit/apple pay/google pay. This isn't enough. Lot more options needed. Razorpay gets it right here.

            2. For entrepreneurs who want to sell to a global audience we need an MoR. There is no two ways about it. Currently Stripe gives us a "FIRC" per transaction. FIRC stands for Foreign Inwards Remittance Certificate. We'll have to produce this to get the transaction regularized which has huge legal costs. Now that cost isn't going to go down anytime soon. So Stripe is a big no no for transactions < 100$ in value as we lose a big chunk of money just getting the transaction regularized. With an MoR, we can just get the entire bulk of transactions regularized through one FIRC against simple invoice.

            3. Indians can setup foreign currency accounts with their banks. It is called as an EEFC account (Exchange Earners' Foreign Currency Account) where we can get deposits directly in the foreign currency we desire (can be USD/EURO/YEN etc). Stripe unfortunately auto-converts USD payouts to INR. So we can't reuse the USD for making purchases (example: server costs to Amazon/DO/Google Cloud or other SaaS services that the product depends on) and have to incur heavy exchange rate loss.

            These 3 are pretty major and blocking issues for integrating Stripe. The only way to get around these problems is to use Stripe Atlas and setup an offshore company and remit funds from that company. That is not worth it. It is cheaper/easier to just use an MoR instead. I really wish Stripe solves this as this would be a big gamechanger not just for India but many countries that have a similar setup (I am sure most countries, except few countries like US/UK, have a similar setup — though I could be wrong).

        2. 1

          any idea how indian companies which are using these payment providers handling SOFTEX.

          1. 1

            They will be going through hell if they use Stripe or any payment processor that isn't an MoR. I have gone through this process myself. It is not at all a pleasant experience. MoR takes out all the pain involved in getting your exports regularized as you have to raise only one invoice: to the MoR. No need to raise invoice per customer as they are not your customers. They are MoR's customers. Your customer is only the MoR. That is it. Simple. Just 1 invoice per month. 12 invoices per year. As easy as it gets. If anyone is not using an MoR in India for international transactions they are shooting themselves in the foot.

      2. 2

        MoR is very important for various other reasons as well. Let me give you an example of India (since I am from India) and why we cannot use Stripe and need a MoR.

        In India, every International transaction has to be regularized. Regularization is based on whether you are exporting Goods or Services. In my case, since I am exporting Computer Software, I will have to generate SOFTEX forms and get that regularized by the bank as mandated by RBI. This regularization carries a fee of 1,500 Rupees after which we get EBRC from the bank. This fee is per transaction. So if I have a SaaS that charges say 10$ per month (which translates to roughly 750 rupees considering 1$ = 75 Indian Rupees), I have to raise an invoice for 10$. Now to regularize it I have to pay a minimum of 1,500 rupees (or 0.0625% whichever is higher). That is a loss of 750 rupees. That is a 100% loss.

        Now tell me what incentive do I have to use Stripe in India? If I have to use Stripe only for domestic transactions, Razorpay provides much better functionality (has lots of integrations with local wallets and UPI which Stripe doesn't support AFAIK).

        I want to use Stripe for international transactions but I just cannot. Stripe is not an MoR and that totally defeats the purpose of choosing Stripe. For domestic transactions Razorpay is much better. So Stripe is in a losing position here. Neither can it capture the domestic Indian market nor can it make it easy for handling international transactions. You are just expanding into India blindly without knowing the intricacies of the implementation involved. Unless you talk/chat with entrepreneurs here to find out their pain points.

        With MoR I have to raise just one invoice to Stripe. That is it. I only have to pay 1,500 rupees in fees for that single transaction (the Stripe payout is considered the transaction) and that will be all. Regularization is easy that way. But right now, if I have to use Stripe, I can't use its India implementation. I have to instead setup a company in some foreign country and use Stripe from there and then send remittances to India. What is the point of doing all that when I can just go with an MoR instead?

        1. 2

          FYI, a single SOFTEX form is enough for all monthly invoices outside India. Read here : https://community.nasscom.in/communities/product-startups/rbi-regulations-for-software-exporters.html

          1. 1

            EBRC fees for some banks (per transaction):

            1. ICICI Bank (1000 Rupees or 0.12% whichever is maximum) :

            https://www.icicibank.com/managed-assets/docs/service-charges/corporate/revision-notice/Trade_Pricingchange.pdf

            1. Yes Bank (500 Rupees per transaction (for Business Growth) to 100 Rupees per transaction (only for Elite Businesses or whatever that means)):

            https://www.yesbank.in/pdf/scheduleofcharges_tradefx_remittances_pric_may12016_englishpdf

            1. HDFC Bank (1500 rupees or 0.0625% whichever is maximum):

            https://v1.hdfcbank.com/assets/popuppages/trade_services_fees_charges.htm

            Only SBI seems to have withdrawn the fees for EBRC in 2019: https://www.livemint.com/companies/news/in-a-major-relief-to-exporters-sbi-withdraws-e-brc-charges-11577016072324.html

            However, I have to verify if that was the case in reality or it is still being levied. Nevertheless, you can already see how painful it is to have to do this for every invoice.

            Apart from this, you'll have to pay a fee for FIRC issuance as well. That is also per transaction. I don't know what is the FIRC fee charged by Stripe's bank (SCB) in India as they don't mention it on their page: https://support.stripe.com/questions/firc-for-international-transactions-in-india but PayPal has 100 rupees + 18% GST per transaction: https://www.paypal.com/in/webapps/mpp/firc-certificate

          2. 1

            This is fees for HDFC Bank for EBRC regularization: "0.0625% min Rs 1500 (same for realization from other bank) + Rs 1000/- ( For late payment i.e beyond 21 days from the date of shipment)"

            The covering letter provided by HDFC Bank to me: https://drive.google.com/file/d/1TCM7cEzXbANML1OdMSqL1mknItpliEyY/view?usp=sharing

            It has 4 columns: Invoice, Transport Documentation, FIRC and GR/SB/SOFTEX form. Transport Documentation is only applicable for Goods Exported not Services so that is kept blank. As you can see, this is per invoice. It is not bulk. Irrespective of whether the SOFTEX form has bulk invoices in it, each invoice will still have a SOFTEX number assigned to it. Check the SOFTEX form structure (it is the same form used for both single as well as bulk): https://drive.google.com/file/d/1uSLCizoW2PTkTt4Gs-0KAogenfL4383d/view?usp=sharing

            This is the format mandated by RBI. It doesn't matter which STPI you get the SOFTEX Form from. It doesn't matter which Bank you get the EBRC covering letter from. The format doesn't change. The only difference might be that some banks charge higher fees and some lower. But it won't vary much. For example, you can compare the covering letter that I need to provide to HDFC Bank with the one provided by Yes Bank: https://www.yesbank.in/pdf/requestletterforprocessingofexportbillagainstadvancerem_pdf . It is the same.

            All banks use the same system: FETERS for FIRC generation and EDPMS for EBRC generation. These two systems are connected with RBI.

            It took me 2+ years to learn all the inner workings of SOFTEX and EBRC and why this is needed/important.

            The bottomline is this: if you are a payment service provider wanting to capture Indian market, do not enter the market unless you can account for all this. If you do not provide an MoR service it is practically useless.

          3. 1

            No you misunderstood that RBI circular. They are talking about single SOFTEX form to make it easy to fill all invoices in a single form. But you still have to fill all invoices and get each invoice regularized. The EBRC is per invoice not per SOFTEX form. Please check with your local bank and you'll know that EBRC is not issued for the SOFTEX Form alone, but a combination of SOFTEX + EFIRC + Invoice. The SOFTEX form can be the same for multiple invoices (if you have put in a bulk SOFTEX form as mentioned in the link), but you still have to create multiple SOFTEX numbers. Kindly take a look at the SOFTEX form itself. It has a column for SOFTEX numbers. It is unique per invoice.

            Even the link has it: "Monthly Soft copy filing of excel summary sheet (prescribed format) giving details of exports, invoice number wise, SOFTEX number wise along with an Annexure with other details"

            ^ The keywords being "invoice number wise" and "SOFTEX number wise". The relaxation is purely to reduce wastage of paper to print multiple SOFTEX forms and instead to have one SOFTEX form for reporting all invoices. I am not talking about that at all. I am talking about regularizing the invoices themselves. SOFTEX is just a certification issued by STPI and you don't have to pay any fee per invoice for it (there is just an Annual fee based on your turnover). It is the EBRC which you obtain from the bank that has hefty fees (1500 rupees or minimum 0.0625% per transaction). You can't obtain an EBRC unless you have SOFTEX + EFIRC + Invoice.

            You can ask your local bank on what their EBRC fee is like. You'll know that all banks have fees in this ballpark.

            1. 1

              Thanks for the info. Is this apply for 2Checkout also, because I saw founder of this one : draftss.com is using that with really good MRR. I'll collect more links from the web who are using stripe, 2checkout and other international payment processors in india.

              1. 1

                this apply for 2Checkout also

                From what I know 2Monetize is the MoR solution from 2Checkout as it handles everything (https://www.2checkout.com/global-payments/)

                I am not sure how good they are in reality as I haven't used them myself. You need to do your own research when it comes to this. I personally use Gumroad (which uses Stripe underneath).

        2. 1

          This comment was deleted 4 months ago.

    2. 2

      Very good point, we 🇸🇰 + other EU county members would benefit. As you might know, it's tax-free up to 10k, but so much administration is around if you want to make sure everything is done right.

      1. 2

        I don't know about that 10K! Can you send me a link to the doc where it's stated, Martin?
        I know that when I sell my service to EU members I need to collect VAT. That VAT must be then passed to the country of origin.

        1. 1

          You can just collect your local VAT rate if you're under €10k instead of customer’s country rate.

  2. 4

    That's a huge step forward, congrats! Do you plan to implement Merchant of Record as well?

    1. 4

      We don't yet offer a merchant of record service, although it can be a fit for certain users! In building Stripe Tax we realized, in many jurisdictions, you don’t need to collect sales tax from day one. However, MoRs do collect taxes on all your transactions immediately, so we found that startups who use MoRs often charge their buyers more than needed.

      Our vision is to make tax compliance as simple as using a merchant of record, without needing to do so! Overall, we'd love to get your feedback as we're only getting started simplifying tax compliance. Shoot me a note anytime at [email protected]

  3. 3

    Wow! Will this finally alleviate the pain of working with VATMOSS as an European company? That would be huge.

    1. 3

      I hope so! We built this product out of Ireland, so believe you me, we made sure it works for European users :)

  4. 3

    Finally! We have been looking forward to it for a long time.

    1. 1

      :) sorry to keep you waiting!

  5. 2

    Hey Team,

    How does this work with Stripe Connect? Eg: As a platform, if I signedup for Tax, will it be enabled for all of the connected standard accounts? Or they have to enable their own? In that case how would the API would look like? How do you handle this?

    1. 1

      Good questions! Connect support varies a bit on your setup, but we do support Standard Platforms who want to enable their connected accounts to charge tax!

      We wrote an FAQ with a bit more detail here:https://stripe.com/docs/tax/faq#what-connect-setups-do-you-support?

      Feel free to shoot me an email if you have more questions! [email protected]

  6. 2

    Great release. Seeing that this is an indiehacker forum, my question is around the pricing structure. Would it take into account the remote seller nexus threshold so the service doesn't activate below the state threshold? As most here aren't doing > $100k in sales?
    Otherwise, we're paying an extraneous 0.5% for Stripe Tax service at say 50k ARR when we potentially don't need to.

    1. 2

      Good question! We wrote up a bunch of FAQs on pricing (https://stripe.com/docs/tax/faq#pricing), but the short answer is...

      Stripe Tax is free if you are not registered to collect tax. We'll surface your sales and compare them to local thresholds so that you know when you may need to register. However, once you do register with a state or country and enable Stripe Tax on the transaction, we will charge the fee, even if the resulting tax amount paid is $0

      Certainly open for more thoughts and feedback: [email protected]

      1. 1

        Thank you for your response @kellykmo! The FAQ is very helpful. For others who are interested:
        https://stripe.com/docs/tax/faq#do-you-charge-a-fee-when-the-tax-collected-is-zero?

  7. 2

    Woo, that's huge!

    • Does it works with checkout links?
    • Do you generate invoices with tax as well?
    1. 2

      Good questions! Stripe Tax doesn't yet work with Payment Links but we're working on it. Keep the feature requests coming!

      On generating invoices, for recurring users (e.g. subscriptions or invoicing), we will generate invoice pdfs for you, but we don't yet generate invoices for one-off payments with Checkout. It's on our to do list though!

  8. 2

    Congrats ont he launch, Kelly!

  9. 1

    I don't believe that everything is so simple. There are pitfalls somewhere here. Moreover, I recently read an article about the tax system on this site https://www.playlouder.com/w4-vs-w2-vs-w9-vs-1099-tax-forms-what-are-the-differences/. And I can say that our country takes most of the money from honest hard workers. Why is this happening? But some rich guys don't pay taxes for years and don't do anything to them. After all, they have the best lawyers who know how to cheat. The state does not pay them money. Am I wrong about something? Or have I opened the eyes of many people? Yes, guys, it's true. Many actors, athletes, and business people do not pay taxes and go into hiding. And they don't do anything to them.

  10. 1

    I think it is one of the best applications of its kind. I use it every time I need to pay taxes. Stripe Tax allows you to calculate the tax to collect on your one-time and recurring payments when using Checkout. You can enable Stripe Tax in Checkout Sessions to automatically compute taxes on all purchases and subscriptions created by Checkout. From what I read on this site https://www.global-accountant.net/payroll-tax-penalty-questions-answers/ , the United States IRS requires that Stripe provide a form called a 1099-K for each Stripe account that meets all of the following criteria in the previous calendar year. The report is based in the United States (owners do not need to be US citizens), or the non-US version is for a US taxpayer.

  11. 1

    Looks really nice. One simple question. Will it support "tax-included" pricing scenario?

  12. 1

    This is amazing, thanks for all the hard work on this!

    There's two things missing to make it fully compliant for me in Poland:

    1. Representing VAT in local currency on the invoice. It could theoretically be included in the memo, but then it's quite hard to do when using Checkout (the invoice will be finalised by the time I get a chance to add it!)
    2. Translating the invoice to Polish. I would be totally happy to do it myself in the dashboard!
  13. 1

    This is helpful, but I'll stick with with Paddle because they're a MoR. What Stripe does now solves just a small part of the problem which could have been done already with some external tools, but the main issue is the accounting and filling the taxes on corresponding jurisdictions, this doesn't solve that. I know companies that went this route and eventually switched to Paddle because there's still too much on their plate.

    Paddle's huge growth was just because they're a MoR, it just sends us an invoice and we're done with it. I know being a MoR is a hassle since you'll have full responsibility for the customers, but the fees are also higher for such feature.

    Looking at replies here I think most people expected a MoR implementation.

  14. 1

    Just yesterday I was wondering how all this VAT stuff works and then today I'm prompted with news of this product that would entirely solve it for me. I definitely signed up, can't wait to be able to use it! Awesome work as always.

  15. 1

    That's great and i like how Stripe is adding more useful services and that's why i'm curious when Stripe is going to be available in my country. (I'm from Peru)

    1. 1

      You can make a U.S based company via a service such as firstbase.io, and then use Stripe. It's what I've done, the entire process was very straight-forward and easy.

      1. 1

        Do you have a way to contact you?. I have 2 or 3 questions about tax-related issues.

        1. 1

          I'm no tax expert, but you can get in touch via my e-mail on my profile here with any questions you have and I'll do my best to answer them!

  16. 1

    Congrats on the launch!
    I've just built a simple sales tax into our product 2 weeks ago, as I was waiting on your move after you have acquired TaxJar. We've just applied for the invite.

  17. 1

    Am I correct in assuming this only works if using Stripe Checkout? My product is fairly simple with just one-off charges. I don't think Stripe has anything around tracking VAT automatically for that so I was forced to build my own solution that separately tracks VAT for each EU country I've had a transaction in. It's not pretty, but it works.

    I'd definitely love for Stripe to be able to tell me the total amount + VAT I've accumulated in each EU country per quarter so that it can make my VATMOSS submissions easier.

    1. 2

      This works with Checkout, Billing, and Invoicing. More news coming soon for users that want to build their own UI for one-off payments.

      In terms of monitoring your obligations, we do look across all your payments made on Stripe, so ideally we can take over the burden of monitoring where you have obligations for you!

      If you're already registered for VAT MOSS, then all you would do is enable Stripe Tax, use inclusive pricing (ensuring the amount your buyer pays never changes), and we would provide reporting such that we break down the tax collected by county and tax rate such that you could make your filings much easier :)

      1. 1

        Oh great, so are you saying I'll be able to do this with Stripe Tax? Awesome.

  18. 1

    What's the time scale for releasing it for everyone?

    Have you sent a care package to Gumroad?

    1. 2

      Invite only starts today (and we're enabling Stripe Tax for users as quickly as we can!), but we'll be making this available to everyone very, very soon!

    2. 1

      As long as Stripe doesn't become a Merchant of Record, Gumroad is safe

  19. 1

    This is great, thanks for sharing this here Kelly.

  20. 1

    Congrats on solving a huge pain point. I have 2 questions:

    1. Do I have to register a company if I need to use Stripe? I am from India 🇮🇳 (last I heard from someone we needed to register a company, just to use Stripe)
    2. Supports Tax returns for India as well?
    1. 3

      Stripe Tax doesn't yet support India, apologies! This launch is just the beginning though, overtime we want to support all markets though.

      1. 1

        But it does have its own website that says it does. Very confusing imo.

        Can you answer my question #1?

        1. 3

          That's just the localized version of our site, apologies if that's confusing :)

          And no, you don't need to be a business to use Stripe, you can see the requirements here: https://support.stripe.com/questions/requirements-to-open-a-stripe-account-in-another-country

    2. 2

      You don't need to register company. Just apply as proprietorship + use your PAN card to get an IEC code. Its all simple. I've done it.

      1. 1

        Lovely, thank you. I've heard from multiple people you needed to create a company so was confused. This is great, I'll do it just like you said :)

  21. 1

    Invite only - you tease! So close.

    This is looking great though. Looking forward to using it when it's public.

    I evaluated a few of the other options earlier this year so would be great to see how stripe new offering stacks up: https://www.ianwootten.co.uk/2021/02/23/comparing-vat-solutions-for-bootstrapped-uk-businesses/

    1. 1

      This is a great summary of the craziness of the tax space! Feel free to update with your evaluation of Stripe Tax ;)

      EDIT: Also I forgot to say, we may be invite-only to start today, but we're working on making Stripe Tax available to all very very soon!!

      1. 1

        Sure thing, will do once I'm able to try it out!

        1. 1

          Oh and just a note, you can request access at the bottom of stripe.com/tax now, just in case you missed it!

          1. 1

            Yup, spied that. Added my details 🤞

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