June 11, 2021: -On Thursday, Stripe debuted a new product that it says will make it easier for businesses to calculate and collect sales taxes, which marks the digital payment giant’s latest push into other areas of finance.
The service, known as Stripe Tax, will automate the calculation and collection of sales tax, value-added tax, and goods and services tax for transactions made in Stripe’s platform. British newspaper publisher News the U.K. and Dutch start-up Routetitan are among those using the service.
Matt Henderson, Stripe’s EMEA lead, said that it works out how much sales tax needs to be paid on some transactions can be a complex process, with rules varying across other countries. For example, there are over 11,000 various sales tax jurisdictions, “often the size of a small town,” Henderson told CNBC.
“There’s a lot of different variables that go into determining what’s the right rate and when is it due for collection and payment,” he added.
Businesses can permit Stripe Tax by adding a single line of code to their website, the company added. Stripe will use data such as a customer’s location and the product or service being sold to determine how much tax is due. Line makes money by taking a small cut of the transaction from its merchants.
Stripe, which competes with Square, Adyen, and Checkout.com, got a big boost from the coronavirus pandemic in the previous year as many businesses moved online due to lockdown restrictions worldwide.
According to Henderson, Stripe has attracted over 500,000 new clients in Europe alone since the start of the pandemic. In addition, the company has been increasingly expanding into areas beyond payments, like lending and bank accounts, from partners such as Citigroup and Goldman Sachs.
However, Stripe ruled out any intention of being a fully-fledged bank, with President John Collison saying in the previous year he doesn’t believe in the Silicon Valley mentality of “doing everything themselves.”
Stripe was privately valued at $95 billion in a March funding round. The company said it would use the fresh funds to expand its European operations. Stripe’s sales tax software was developed out of Dublin, where it employs nearly 80 engineers.
The launch of the company’s new product comes after it acquired U.S. start-up TaxJar, specializing in sales tax software, in April.
