Unable to charge tax on gift cards

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New Member
5 0 0

Hi,

 

Is there a way to charge tax on gift cards offered by Shopify? Shopify notified me that my store is not charging tax currently:

Tax is not charged on Gift CardsTax is not charged on Gift Cards

 

 

I faced an error message when I went through Settings > Taxes page.

Error message upon checking boxes Charge Tax to 2 gift cards: "Failed to save 2 product variants."Error message upon checking boxes Charge Tax to 2 gift cards: "Failed to save 2 product variants."

 

 

I also understand that gift cards, unlike regular products, does not have a checkbox "Charge tax on this product" under Product > Pricing.

 

 

 

 

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Shopify Staff
Shopify Staff
500 55 101

Hey @!

 

Cal here from Shopify, thanks for reaching out to us. I understand how this warning message may be misleading. While it is warning you that you are not charging tax on a specific product, there is no reason to heed that warning unless there is specific legislation in your region that states you must apply tax to gift cards.

 

Gift Cards, generally, should not include tax. When your customer spends that Gift Card on your store, it will be treated as cash, and the products they purchase will have tax on them. If you were to charge tax for gift cards, you would effectively be double taxing your customers. 

 

I hope that makes sense! You can read our FAQ about Gift Cards here

Cal | Social Care @ Shopify
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New Member
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Hi Cal,

 

Just to clarify my understanding of gift cards being recognized as cash:

 

If I am issuing gift cards of $100, and my customer uses this gift card to purchase a $300 item, the tax charged will be a % of $300? 

 

My end goal is for the tax to always be the % of the amount paid- i.e. the amount paid after discount (i.e. $200 in the above example). If this is possible, I would like to charge tax on gift cards. 

 

Else, would my next alternative be using discount codes? 

 

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