Tax Variances in Payables

A tax variance occurs when there is a difference between the tax on the invoice and the tax on the PO matched to the invoice. When you match a PO to an invoice, there are three tax-related variances that can occur:

Tax Exchange Rate Variance (TERV) – when there is a difference between the invoice and PO distributions due to exchange rate variance.

Tax Invoice Price Tax Rate Variance (TIPV) – when there is a difference between the invoice and PO distributions due to price variance.

Tax Rate Variance (TRV) – when there is a difference between invoice and PO distributions due to difference in tax applicability.
In addition, Tax Quantity Variance (TQV) is calculated, but is shown as a non-variance distribution.

Variances are calculated for all taxes that are enabled in E-Business Tax.

The following example illustrates how variances are determined.

Note that the exchange rate and tax amounts differ between the PO and the Invoice. The distributions for the invoice show a Tax Exchange Rate Variance of 0.3 and a Tax Rate Variance of $20.00.

To illustrate an Invoice Price Tax Rate Variance, assume that the invoice is the same as above, but the Unit Price changes from $100.00, as shown on the Purchase Order, to $200.00. The Tax Amount also changes as a result of the change in Unit Price.