Prioritizing tax relief at source

Prioritizing tax relief at source

After exploring the merits of automating tax document management to achieve tax relief on behalf of your customers, our tax operations transformation series continues. This series guides you on the journey to streamline your tax operations process. In this second article, we discuss why you should prioritize providing a withholding tax relief at source service to your customers. 

Investors holding a portfolio of assets such as stocks or bonds will be subject to withholding tax at source on any income paid by those assets, most commonly in the form of dividends or interest. Depending on the type of investor, where they are based, and the country their shares are invested in, they may be eligible for a reduction of the withholding tax rate they are subject to. 

Reduced tax rates on investment income are commonly available through double taxation agreements between country of investment, country of residency, domestic exemptions, and other mechanisms. The term tax relief at source is normally associated with the reduced tax rate being applied to the investor at the time the income is paid. Which means that there will be no need to submit any tax reclaim to receive the benefit they are eligible for. 

Regardless of the circumstances, the type of customer involved, or where they live, to offer a best-in-class tax service, tax relief at source should be completed swiftly and accurately. 

The heavy hands of competition and regulation

In a highly competitive marketplace, it is imperative that you provide a tax operation service that ensures relief at source is applied before any payment is made. The consequences of not doing so are lengthy and expensive paper-based reclaims processes and remediations, the potential for internal losses, and lower customer satisfaction. 

The substantial work required to mitigate these risks is compounded by the fact that different regulations in different jurisdictions tightly control the delivery of relief at source in their own unique ways. 

It is a complex mix which forces financial intermediaries to produce multiple disclosures or invite regulatory penalties and the loss of ground to competitors. 

Tax relief at source depends on trust 

While attempting to provide best-in-class tax relief services, intermediaries are also expected to handle trading data and income generated from financial assets in an accurate, timely, and compliant manner. 

Within these constraints, success becomes contingent on the ability to access reliable and trustworthy data, using solutions that are enterprise-grade and scalable. 

Our tax relief at source module facilitates this by automating the processes required for exact and compliant relief at source. From correct account opening procedures and disclosure of investor identity to rigorous and organized end-of-year tax reporting. 

End-to-end automation 

The scale of automation within our tax relief at source module is such that every process is included, encompassing tax elections, withholding statements, and the collection, production, and submission of the breakdown of holdings on omnibus accounts. 

Speed and accuracy are an integral part of our tax automation module. For example, any required relief at source document is automatically captured, pre-filled, and then dispatched to its assigned destination with chasers built into the workflow. 

This functionality ensures the document is collected and submitted to the market so the relief at source can be achieved with time to spare. 

Through this end-to-end relief at source tax preparation automation, remediations become vanishingly rare, internal losses are reduced, customer satisfaction is assured, data is enriched, and compliance is confirmed. 

The configurable nature of Xceptor enables a smoother and more efficient process when it comes to adapting to new regulation, as non-technical users can configure the tool, ensuring your organization is compliant. Fully auditable, with control mechanisms in place, our relief at source module is underpinned by secure technology you can trust. 

In our next article, we will explore the challenges of tax reclaim and how our tailored module transforms the arduous task of recovering excess withholding tax.