The TaxType code 'X' cannot be used with account code 'Y'

Problem Statement

Xero returns "The TaxType code 'X' cannot be used with account code 'Y'" when syncing invoices from Chargebee.

Solution

Xero throws this error when the type of the GL account on the invoice item does not match the type of the tax applied. For example: a revenue account (e.g. 200) with a liability tax type (e.g. GSTONIMPORTS), or an EXPENSE account with a REVENUE tax type. Xero’s standard rates and types are documented here.

Example: If you configure "Sales Tax on Imports" (a standard US Xero rate) for an exempt invoice, and the invoice item uses a revenue account, the combination can trigger "The TaxType code GSTONIMPORTS cannot be used with account code 33."

Steps to Set It Up

1. Choose a tax code in Xero that is applicable to the account type you use for the item (e.g. revenue account with a revenue tax type, liability account with a liability tax type).
2. Align account codes and tax types in your Xero chart of accounts and tax configuration so they match.