---
title: Tax Item Type
description: Learn how to add tax items to invoices, PRs and POs for convenient tax management.
---

[Skip to content](https://help.precoro.com/tax-item-type#main-content)

[Contact us](https://help.precoro.com/kb-tickets/new?hsLang=en) [Customer portal](https://help.precoro.com/tickets-view?hsLang=en)

[![Property 1=Default](https://help.precoro.com/hubfs/Property%201=Default.svg)](https://app.precoro.com/login)

Open main navigation

Close main navigation

- [Contact us](https://help.precoro.com/kb-tickets/new)
- [Customer portal](https://help.precoro.com/tickets-view)
- [Contact Us](https://share.hsforms.com/1-5JilMA_Qv6AOSVjFtNhDg14slf)

[Contact Us](https://share.hsforms.com/1-5JilMA_Qv6AOSVjFtNhDg14slf)

 Hi there! How can we help you today?

- There are no suggestions because the search field is empty.

1. [Knowledge Base](https://help.precoro.com/?hsLang=en)
2. [Precoro Setup](https://help.precoro.com/precoro-setup?hsLang=en)
3. [Working with Items](https://help.precoro.com/precoro-setup?hsLang=en#working-with-items)

# Tax Item Type

## Learn how to create and add tax items to your custom and standard POs, invoices, PRs and Service Orders.

#### TABLE OF CONTENTS

- [How to Create New Tax Items on the Item Management Page](https://help.precoro.com/tax-item-type#on-item-management-page)
- [How to Create New Tax Items on the Document Page](https://help.precoro.com/tax-item-type#on-document-page)
- [Main Operational Features of Tax Items](https://help.precoro.com/tax-item-type#main-features)

### How to Create New Tax Items on the Item Management Page

To create a new tax item on the Item Management page:

1. Go to the **Item Management** module → **Item Management**.
2. Click the **Add Item** button → enter the required information.
3. In the Item Type field, select the **Tax** option.
4. Click **Save** to apply the changes.

This item can be added to documents through the Catalog for future use (available for Invoices, POs, PRs, RFPs, and Service Orders).

**💡 Please note:** You can add a tax-type item to the catalog and use it in the documents regardless of your company’s tax settings in Configuration.

### [![Add Item](https://help.precoro.com/hs-fs/hubfs/Add%20Item.png?width=670&height=317&name=Add%20Item.png)](https://help.precoro.com/hubfs/Add%20Item.png?hsLang=en)

### How to Create New Tax Items on the Document Page

You can add a new tax item while creating standard or custom POs and invoices. 

Make sure that the tax functionality is deactivated in **Configuration → Basic Settings → Document Setup → General Settings → Taxes.**

[**![General Settings](https://help.precoro.com/hs-fs/hubfs/General%20Settings.png?width=670&height=281&name=General%20Settings.png)**](https://help.precoro.com/hubfs/General%20Settings.png?hsLang=en)

Once deactivated, follow the steps below:

1. Click the **Add Tax** button in the created invoice or PO.
2. Fill out the required information.
3. Check the **Add to Catalog** box (optional) to save the item in the catalog with the corresponding tax type.
4. **Save** to apply the changes.

[![add-tax](https://help.precoro.com/hs-fs/hubfs/add-tax.jpg?width=670&height=246&name=add-tax.jpg)](https://help.precoro.com/hubfs/add-tax.jpg?hsLang=en)

 

**💡Please note:** If you manually add a new item line using the **Add** button and enter the SKU and Name of an existing tax item from the Catalog, the system will recognize it as a tax-related expense and mark it with a tax icon in the document.

[![Icon](https://help.precoro.com/hs-fs/hubfs/Icon-Feb-18-2025-12-02-28-6923-PM.png?width=670&height=198&name=Icon-Feb-18-2025-12-02-28-6923-PM.png)](https://help.precoro.com/hubfs/Icon-Feb-1.png?hsLang=en)

As an alternative to creating tax items, you can add new taxes through Configuration. Learn more in [this guide](https://help.precoro.com/how-to-set-up-tax-rates?hsLang=en). 

### Main Operational Features of Tax Items

**Tax items handling**:

- Tax items are added as **individual lines** and [cannot be split in Service Orders.](https://help.precoro.com/how-to-create-invoices-and-receipts-for-service-orders?hsLang=en#Split-Lines-Functionality)
- No additional taxes are calculated for tax items. The **“Tax %”** and **“Tax Sum”** columns always remain empty for them.
- Tax items can be **free of charge** or have a **negative price**.
- You can add an unlimited number of tax items to a document, as well as create a document with only tax items.
- Tax items can be added to related Credit Notes.

**Matching process**: 

- Adding tax items to an invoice from a PO does not trigger the **Matching** process, even if the tolerance limit is exceeded.
- Tax items are automatically transferred to the PO after invoice confirmation, and amounts are updated (including AI-processed documents).

**Receiving**:

- Tax items cannot be received, so they are automatically excluded from the list of items to receive when you create a receipt for a PO.
- In Service Orders, the **“Can Be Received”** field is set to **No** by default.

**PO completion:**

- The Purchase Order is automatically completed if all the regular items are received (except for the non-receivable ones), invoiced, and paid (all items have to be paid, including the non-receivable ones).
- You can manually complete a Purchase Order once all received items are paid, even if the receipt amount is less than the invoice total.
- Documents containing only non-receivable items (like Tax and Shipping) will always have the **“Not Received”** status as these items do not require receiving.   
  To have the **“Partly Received”** or **“Received”** status, the document must contain at least one item that can be received.
  
  | ![Status 2](https://help.precoro.com/hs-fs/hubfs/Status%202.png?width=423&height=161&name=Status%202.png)<https://help.precoro.com/hubfs/Status%201.png?hsLang=en> | PO contains only non-receivable paid items. |
  | --- | --- |
  | [![Status 1](https://help.precoro.com/hs-fs/hubfs/Status%201.png?width=423&height=161&name=Status%201.png)](https://help.precoro.com/hubfs/Status%201.png?hsLang=en) | PO contains receivable and can include non-receivable items. All items are paid. |

**AP Automation processing**:

Here's how taxes are added in AI-processed invoices:

- 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.
- If taxes are enabled in your company:
  
    - When the recognized tax rate equals one of the existing taxes, this tax appears as tax % in the invoice.
    - If there is no matching tax rate, Precoro adds the total recognized tax amount as a separate Tax-type item. It helps keep invoice totals accurate when a supplier’s tax rate doesn't match your predefined taxes, so you spend less time correcting tax discrepancies manually.

Check [this guide](https://help.precoro.com/how-to-manage-taxes-with-intelligent-ap-automation?hsLang=en) to learn more about managing taxes with Intelligent AP Automation.

- [Precoro Setup](https://help.precoro.com/precoro-setup?hsLang=en#main-content)

    - [Configurations](https://help.precoro.com/precoro-setup?hsLang=en#configurations)
    - [User Management](https://help.precoro.com/precoro-setup?hsLang=en#user-management)
    - [Custom Fields and Forms](https://help.precoro.com/precoro-setup?hsLang=en#custom-fields-and-forms)
    - [Supplier management](https://help.precoro.com/precoro-setup?hsLang=en#supplier-management)
    - [Working with Items](https://help.precoro.com/precoro-setup?hsLang=en#working-with-items)
    - [Approval Workflow](https://help.precoro.com/precoro-setup?hsLang=en#approval-workflow)
    - [Location Management](https://help.precoro.com/precoro-setup?hsLang=en#location-management)
    - [Precoro Payments](https://help.precoro.com/precoro-setup?hsLang=en#precoro-payments)
    - [Two-factor authentication](https://help.precoro.com/precoro-setup?hsLang=en#two-factor-authentication)
    - [Security](https://help.precoro.com/precoro-setup?hsLang=en#security)
    - [US Based Server](https://help.precoro.com/precoro-setup?hsLang=en#us-based-server)
- [How to use Precoro](https://help.precoro.com/how-to-use-precoro?hsLang=en#main-content)

    - [Warehouse Requests](https://help.precoro.com/how-to-use-precoro?hsLang=en#warehouse-requests)
    - [Requests for Proposals](https://help.precoro.com/how-to-use-precoro?hsLang=en#requests-for-proposals)
    - [Purchase Requisitions](https://help.precoro.com/how-to-use-precoro?hsLang=en#purchase-requisitions)
    - [Purchase Orders](https://help.precoro.com/how-to-use-precoro?hsLang=en#purchase-orders)
    - [Service Orders](https://help.precoro.com/how-to-use-precoro?hsLang=en#service-orders)
    - [Receipts](https://help.precoro.com/how-to-use-precoro?hsLang=en#receipts)
    - [Invoices](https://help.precoro.com/how-to-use-precoro?hsLang=en#invoices)
    - [Expenses](https://help.precoro.com/how-to-use-precoro?hsLang=en#expenses)
    - [Budgeting](https://help.precoro.com/how-to-use-precoro?hsLang=en#budgeting)
    - [Inventory](https://help.precoro.com/how-to-use-precoro?hsLang=en#inventory)
    - [Reports](https://help.precoro.com/how-to-use-precoro?hsLang=en#reports)
    - [AP Inbox and Intelligent AP Automation](https://help.precoro.com/how-to-use-precoro?hsLang=en#ap-inbox-and-intelligent-ap-automation)
    - [Working with documents](https://help.precoro.com/how-to-use-precoro?hsLang=en#working-with-documents)
    - [Suppliers Portal](https://help.precoro.com/how-to-use-precoro?hsLang=en#suppliers-portal)
    - [Supplier Registration](https://help.precoro.com/how-to-use-precoro?hsLang=en#supplier-registration)
    - [Attachments, Filters, and Search](https://help.precoro.com/how-to-use-precoro?hsLang=en#attachments-filters-and-search)
    - [Mobile App](https://help.precoro.com/how-to-use-precoro?hsLang=en#mobile-app)
    - [FAQs and Troubleshooting](https://help.precoro.com/how-to-use-precoro?hsLang=en#faqs-and-troubleshooting)
- [Precoro Integrations](https://help.precoro.com/precoro-integrations?hsLang=en#main-content)

    - [QuickBooks Online Integration](https://help.precoro.com/precoro-integrations?hsLang=en#quickbooks-online-integration)
    - [NetSuite Integration](https://help.precoro.com/precoro-integrations?hsLang=en#netsuite-integration)
    - [Xero Integration](https://help.precoro.com/precoro-integrations?hsLang=en#xero-integration)
    - [API Requests and Webhooks](https://help.precoro.com/precoro-integrations?hsLang=en#api-requests-and-webhooks)
    - [SSO Setting](https://help.precoro.com/precoro-integrations?hsLang=en#sso-setting)
    - [Google Integration](https://help.precoro.com/precoro-integrations?hsLang=en#google-integration)
    - [Power BI](https://help.precoro.com/precoro-integrations?hsLang=en#power-bi)
    - [Integration with Slack](https://help.precoro.com/precoro-integrations?hsLang=en#integration-with-slack)
    - [PunchOut Catalogs](https://help.precoro.com/precoro-integrations?hsLang=en#punchout-catalogs)
    - [Integrations via Connectors](https://help.precoro.com/precoro-integrations?hsLang=en#integrations-via-connectors)
    - [Bill.com Integration](https://help.precoro.com/precoro-integrations?hsLang=en#bill-com-integration)
- [Precoro Updates](https://help.precoro.com/precoro-updates?hsLang=en#main-content)

    - [Releases, 2026](https://help.precoro.com/precoro-updates?hsLang=en#releases-2026)
    - [Releases, 2025](https://help.precoro.com/precoro-updates?hsLang=en#releases-2025)
    - [Releases, 2024](https://help.precoro.com/precoro-updates?hsLang=en#releases-2024)
    - [Releases, 2023](https://help.precoro.com/precoro-updates?hsLang=en#releases-2023)
    - [API Updates](https://help.precoro.com/precoro-updates?hsLang=en#api-updates)
    - [General changes](https://help.precoro.com/precoro-updates?hsLang=en#general-changes)

[![Precoro](https://help.precoro.com/hubfs/Precoro.svg "Precoro")](https://precoro.com/)

<https://www.facebook.com/precoro> <https://x.com/PrecoroHQ> <https://www.youtube.com/@precoro> <https://www.linkedin.com/company/precoro>

Copyright © 2026, Precoro