How to Manage Taxes with OCR

TABLE OF CONTENTS

• How to Manage Taxes with OCR-Recognition

  • Handling Tax Rate Mismatches

• How to Add Taxes Directly to the Document

• How to Work with Item Tax Rates

• Handling Taxes During Invoice-to-PO Matching
  

How to Manage Taxes with OCR-Recognition

Precoro streamlines tax recognition by using OCR to automatically identify and apply taxes to relevant items on invoices. 

How it works:

1. Upload the document for recognition.
2. OCR identifies the tax items in the document.
3. If taxes are disabled in your company in Configuration → Basic Settings, the tax will be added as a single tax item line. This item can be matched with a tax item saved in the catalog.
4. If taxes are enabled in your company:
   • When the recognized tax rate equals one of the existing taxes, this tax will be applied to items.
   • When there's no established tax that corresponds to the recognized rate, it will not be automatically applied. You will see the recognized tax rate below the Taxes field; select the value manually based on this information.

Key points on how OCR recognizes Taxes:

• Taxes are applied only to recognized items. If taxes aren't recognized for certain items, they won’t be recorded. However, you can manually add them if needed.
• OCR-recognized taxes override any default taxes set in the Supplier profile. For instance, if the supplier's default tax is 20%, but the OCR-recognized rate is 23%, the 23% tax will be applied. Using the recognized rate helps keep the data precise and up-to-date.
• With the single-line functionality enabled, recognized taxes will be calculated based on the Net Total and added to the document.
• OCR tax recognition is consistent across all suppliers and applies to all Precoro documents.
• Tax items are identified by keywords during OCR processing and automatically assigned a “Tax” type.

To learn more about managing taxes in Precoro, please follow this link.

Handling Tax Rate Mismatches

When you create an invoice from an OCR attachment, sometimes the tax rate in the document may not exactly match your existing tax rates (for example, if there are similar tax rates or no match at all). In this case, Precoro will highlight the tax rates detected in the OCR document. You can then choose the correct tax rate or create a new one and link it to the OCR-recognized rate.

How to Add Taxes Directly to the Document

Precoro allows you to add taxes directly within the document, so you don’t need to navigate to settings and back. 

Here is how to add taxes to the document:

1. Click the Taxes field and select Add New Tax at the top of the drop-down menu.
2. Enter the tax information and click Save.
3. The newly added tax will now be available for selection in the list.

For more details on creating taxes in Precoro, refer to this article.

Precoro also uses OCR to recognize tax rates directly from documents. It maps the OCR-recognized tax values to your existing rates in Precoro and automatically fills the Tax Rate field. Additionally, the system applies the default tax for the supplier in Standard, Service, Blanket PO per Item, and Total document types.

How to Work with Item Tax Rates 

Some invoices may include items with different tax rates (e.g., two items with a 23% tax rate and one with a 0%). Here’s how Precoro processes these item-level tax rates through OCR:

• If an item has an item-specific tax rate, it is applied based on the OCR attachment.
• If an item does not have a specific tax rate, the document-level tax rate is applied to the items.
• No taxes will be applied if no tax rates are present on the item and document level.
• If an item has a tax rate that does not exist in your configuration (Configuration → Taxes), it will not be added automatically to the item or document. Instead, you will be prompted to add this tax:
  

Handling Taxes during Invoice-to-PO Matching

OCR shows the applicable tax rate and automatically selects the correct tax from your company’s setup—even when multiple taxes have the same rate but different names.

When matching an OCR-recognized invoice to a PO, document-level taxes are matched following these rules:

1. If no tax is applied in the OCR-recognized invoice, we do not add any extra tax, even if it was expected in the PO.
2. If OCR recognizes a tax, and the tax rate is the same as in the order, the tax name specified in the PO is assigned to the tax in the invoice.
3. If OCR recognizes a tax, but it is not specified in the PO, the supplier’s default tax or the last selected tax for this supplier is added.

Once the corresponding PO is found and document-level tax is selected, the invoice items are mapped with the PO items. Tax mapping follows the same logic.