The benefits and challenges of tax automation: intelligence from our tax clients

Our tax clients and tax community are our best sources of intel

Digital transformation, particularly automation, is impacting every process touch point for financial services companies, including withholding tax processes. Now, as solutions like tax automation are gaining in popularity, both the challenges and benefits associated are becoming more clearly defined. 

For more than a decade, Xceptor has sat at the heart of an engaged and active tax community undertaking digital transformation efforts. On one side, our clients include 7 of the top 10 global custodians and on the other, we have partnered with Clearstream to redefine the service for withholding tax processing for financial intermediaries. This provides a unique insight and feedback loop into the industry’s digitization journey, shedding light on how companies are embracing things like tax automation. 

The community at a glance: an appetite for tax automation

So where is the industry at now? Suffice to say, tax automation still doesn’t dominate the main back-office processes in a custody tax operation, but the appetite is there, and traction is gaining. We often hear about the complexities and challenges of automating the full end-to-end process of operational withholding tax processes, and no one is saying it is easy, but it can be done. Our community is helping to ensure we are keeping on top of what is needed today and in the future.

Key challenges facing tax process automation

The main challenges to implementing process change will sound familiar to many, as these are hindrances that crop up often during companies’ digital transformation projects. These challenges include:

  • Legacy systems and processes: The sporadic adoption over time of applications and manual processes that are isolated and disparate from one another.
  • How to define and implement a standardized approach to tax processes.
  • Digitizing said processes, including associated data and documentation, across all local variances.
  • Delivering a tax service with true tax transparency.
  • Finding solutions that can keep up with tax authority’s ever-changing needs.

Why the industry is embracing tax automation

These challenges are a reality for any company, but overcoming them is well worth the effort, and the industry is looking to actively address these challenges for a number of reasons:

  • Accuracy while scaling: Scalability is now a priority across the industry, and as companies scale to meet new growth demands, they need to ensure that their processes and workflows can enable data accuracy at all times, across departments and systems.
  • Creating the ability to generate additional revenue through chargeable services: Creating additional revenue streams is more of a possibility for companies than before, thanks to the capabilities of digital solutions like automation.
  • Maximizing tax relief by charging the right withholding rates at source, or making timely reclaims.
  • The nirvana of automated and digitally-based exchanges of data, documents and reporting to end investors, market participants or the tax authorities themselves.

The benefits of automation

So, what does success look like? For our clients, tax automation has led to greater cost savings and more streamlined processes, resulting in more holistic tax processes for themselves and their customers.

Northern Trust is one of our clients that saves around $1 million per year by increasing its Relief-at-Source (RAS) efficiency rather than filing tax reclaims. Another major client of ours manages its RAS and full tax reclaim process on a single platform, enabling it to automatically apply the right tax calculations at the right time, which has saved them $700k annually from year one

Other clients point to operational risk reduction – getting rid of those pesky spreadsheets – and reducing process cycles by months. Another client has been able to create a more complete, industry-leading tax service for its customers.

These are just some of the success stories that have come from our clients leveraging our solutions for their tax process automation needs. To find out more about how Xceptor is helping companies transform their data, read our client success stories now.

Xceptor customer tax forum

Besides our data automation platform and its data and process-enhancing capabilities, we also have a thriving client tax forum that brings all of our tax clients together. Our clients drive it, sharing best practices, talking about market and regulatory changes and challenges, and out of these insights, we agree on product priorities, and what should be tackled first and baked into the Xceptor product roadmap. 

And with Clearstream as part of our community, we are also laying the foundations for an industry shift. 


Like all other operational processes, tax processes – such as withholding tax – can benefit from tax automation tools and solutions. Despite the challenges, making the change to tax automation can help companies be more confident in their data, more efficient in their operations and delivery, and more prompt in meeting their tax obligations. 

What’s more, by being a part of a community of experts paving the way for industry change, companies can be at the forefront of digital solutions like tax automation, start leveraging them sooner, and maintain their competitive advantage while others continue to struggle with the inefficiencies of manual, disparate systems and processes. 

If you’re interested in joining our Client Tax Forum, we’d love to hear from you. Alternatively, you can learn more about our tax product, read our tax processing product sheet, or get in touch with us for more information on how we can support your tax withholding process.