The article explains how to apply taxes to payment platform fees in accounting software, including QuickBooks and Xero.
Businesses in many countries must report taxes not only on sales but also on fees paid to payment platforms, such as service or processing fees.
Even when a tax is zero-rated—meaning no payment is due—accounting standards still require it to be properly recorded, creating complexity and potential compliance challenges.
This guide is useful for:
Businesses and accountants who need accurate, automated tax reporting on platform fees and other expenses. It helps streamline record-keeping, reduce errors, and simplify compliance.
Please note: Taxes on fees can only be applied in Per Transaction Mode.
- For US Businesses: Fees are not taxable.
- For businesses in VAT systems: taxes may be applied to fees as described in your setup.
Enable Generic Tax Codes
- Go to Settings in the left menu. Ensure the required integration is selected at the top of the page.
- Navigate to the Taxes tab.
- In Expense Tax Settings, toggle Apply generic tax code to ON.
- Select the appropriate tax lines for:
- Fees: Paid directly to the payment processor.
- Application Fees: Paid to other third parties connected to the payment processor.
- Tax codes are sourced from your accounting platform. Ensure the required tax codes exist there before selection in Synder.
- Click Update to save changes.
- Sync transactions.
Result After Syncing Transactions
After syncing your transactions with taxes on fees enabled in your accounting software, each Expense/Fee transaction will include the selected tax code. Taxes will be applied to all synchronized expense transactions and will be reflected in tax reporting.
FAQ
- Can I apply taxes to fees in all sync modes?
No. Taxes on fees can only be applied in Per Transaction Mode.
- What should I do if I don’t see the tax code I need?
Ensure that the required tax code already exists in your accounting platform before selecting it in Synder.
- Will this affect all synced transactions?
To apply changes to already synced transactions, resync them from the Platform’s Transactions tab.
Reach out to the Synder Team via online support chat, phone, or email with any questions you have – we’re always happy to help you!
