---
sourceDocument: Yokohama Finance and Supply Chain
sourceDocumentLink: https://servicenow-prod.fluidtopics.net/r/yokohama/source-to-pay-operations

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    - yokohama

ft:locale :

    - en-US

ft:publication_title :

    - Yokohama Finance and Supply Chain

ft:clusterId :

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workflow :

    - Employee


---

# Tax calculations

# Tax calculations {#ariaid-title1}

* Release version: Yokohama
* 
* Updated July 31, 2025
* 
* ![](https://www.servicenow.com/docs/portal-asset/ico-clock) 1 minute to read

Calculate the final tax for an invoice based on the tax type and the tax tolerance variance.

The Accounts Payable Operations application enables the validation of supplier-provided taxes for enhanced tax compliance and improved operational effectiveness.

Tax specialists create tax types of either indirect tax or withholding tax. One or more tax lines are added to invoice lines. Based on the tax type, the supplier tax is calculated against the invoice line amount. If the supplier tax
amount is greater than the system tax amount, an overtax amount variance is calculated. If the supplier tax is less than the system tax amount, an undertax variance is calculated. You can choose to accept the system tax or the supplier
tax,which will determine the final tax that is calculated and displayed on the invoice tax line and invoice header.

For example, for an invoice line amount of $1000, add a tax line of the indirect tax type with a supplier tax of $100. The final tax amount would be calculated as the sum of $1000 and $100, for a total of $1100. If you select the
withholding tax type, the final tax amount is calculated as the difference between the invoice line amount of $1000 and the supplier tax of $100, for a total of $900.
* **[Create tax codes to be added in an invoice](https://servicenow-prod.fluidtopics.net/Q1KLbX93_roxANQgaHcfoQ)**   
  Create tax codes to be added in an invoice.
* **[Create tax types to be used in an invoice](https://servicenow-prod.fluidtopics.net/6SsT9WvlhlwPDgqThR2_iQ)**   
  Create tax types to be added in the invoice.

**Related concepts**   

* [Accounts Payable Invoice Processing](https://servicenow-prod.fluidtopics.net/4M9DzAwOgNa9BmBmNshnCw "Accounts Payable Invoice Processing (com.sn_ap_apm) enables Accounts Payable Specialists to ingest invoice documents and extract invoice data using ServiceNow Document Intelligence.")
* [Invoice Case Management](https://servicenow-prod.fluidtopics.net/uRofl5rX5AruEAXd_GnmiA "With Invoice Case Management, agents can manage and work on their assigned invoice cases, request more information from suppliers or employees, and create and assign tasks to users using the Accounts Payable workspace.")
* [Source-to-Pay Workspace](https://servicenow-prod.fluidtopics.net/8cC1lybAQu8dN671yMI2Lg "The Source-to-Pay Workspace enables you to manage and work on cases and tasks related to invoices and invoice exceptions.")
* [Invoice processing cases](https://servicenow-prod.fluidtopics.net/NoqhBRYN5hAl9N4lAyFhkg "Typically, Accounts Payable Operations integration with Document Intelligence automatically creates the invoice processing case by extracting data from the invoice that you receive as an attachment via email. However, the Accounts Payable Specialist may need to manually create a new invoice or update details of a partially created invoice in situations where the automated invoice creation process encounters issues or is not available.")
* [Tolerance Rules and Variances for invoices](https://servicenow-prod.fluidtopics.net/ULJvN5hmmS8PEvCIg4jQzA "Tolerance rules define the limits set on an invoice to determine the permissible amount of variance that can be applied to an invoice before the invoice total exceeds the tolerance limit.")
* [Invoice approvals](https://servicenow-prod.fluidtopics.net/vrNSVQBVP03wVQyX1~ze6w "Invoices with the No exceptions found status are eligible for approval.")