For more than a decade, Xceptor has been fortunate to sit at the heart of an engaged and active tax community. On one side our clients include 5 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 digitisation journey.
An appetite for automation
So where is it at now? Suffice to say 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. And no-one is saying it is easy, but it can be done, and our community is helping to ensure we are keeping on top of what is needed today and in the future.
The main challenges to implementing change will sound familiar:
Legacy: the sporadic applications and manual processes adopted over time.
How to define a standardised approach to tax processes.
Digitising those processes, 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 does the industry want to overcome these challenges?
Accuracy while scaling.
Creating the ability to generate additional revenue through chargeable services.
Maximising tax relief by charging the right withholding rates at source, or timely reclaims.
The nirvana of automated and digitally based exchange of data, documents and reporting to end investors, market participants or the tax authorities themselves.
The benefits of automation
What does success look like then? Northern Trust is one of our customers and saves around $1m per year by increasing its Relief-at-Source (RAS) efficiency rather than filing tax reclaims. Another major client manages its RAS and full tax reclaim process on a single platform enabling it to automatically apply the right tax calculations and has saved $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 has been able to create a more complete, and industry-leading tax service for its clients. There’s more to hear too.
Xceptor customer tax forum
Our customer tax forum brings all of our tax customers together. Our customers drive it, sharing best practices, talking about market and regulatory changes and challenges. We agree product priorities, what should be tackled first and baked into the product roadmap. And with Clearstream part of our community we are also laying the foundations for an industry shift. This is something we are really excited about and you can learn more about it in our podcast chat with Sam Riley, executive board member at Clearstream and Head of Investor Services and Financing, where Sam talks about an industry vision for tax services.
If you’re interested in joining our Customer Tax Forum, we’d love to hear from you. The more the merrier, it’s your industry. Contact us to learn more.