Key takeaways
- Compare manual and touchless automated indirect tax compliance workflows across data processing, validation, and filing stages.
- Discover how ONESOURCE Indirect Compliance powered by CoCounsel streamlines compliance, reduces risk, and saves significant time for tax teams.
- Explore real-world efficiency gains, risk reduction, and quality improvements enabled by automation in indirect tax workflows.
This guide provides a detailed comparison of two approaches to indirect tax compliance:
- Manual tax compliance workflow: Tax teams manually extract and aggregate financial data, perform adjustments, prepare and file returns across disconnected systems with significant human intervention at each stage
- Touchless automated compliance workflow: AI-powered automation handles data integration, validation, reconciliations, and filing with minimal human intervention, until the review and analysis stage, before signing off using ONESOURCE Indirect Compliance powered by CoCounsel
An important clarification: Tax determination and calculation happen at the point of transaction throughout the month. Touchless compliance is a movement driving a shift in how compliance functions operate through advanced and intelligent tools. In the context of indirect tax, this specifically refers to the autonomous process of preparing returns for the prior month using that already-calculated transaction data.
The following comparison examines three critical stages: data processing, validation, corrections and reconciliation, and return preparation and filing.
Stage 1 of 3: Data processing
Traditional manual tax compliance workflow
Process description: Your tax team extracts transaction data from multiple financial systems, often running custom reports that export to CSV or Excel files. Hours are spent standardising date and number formats, aligning file structures to templates, and making sure all the necessary fields are present, due to differences in how data gets exported from the multiple systems most organisations use as sources of compliance data.
Beyond this, there are functional differences that need to be accounted for, like different product codes across platforms, system dates, or when customer identifiers don’t match. Teams may also review completeness of the custom reports, and other source data (such as emails, Tax Authority pre-filled data) to ensure all transactions and data across multiple systems have been extracted and ready to be loaded.
Time required: Multiple hours to days depending on transaction volume, system and cross-functional dependencies
Risk factors: Format errors, missed reports, and new transaction types and systems create compliance exposures that increase audit risk by 3x compared to automated solutions
Touchless compliance workflow
Process description: ONESOURCE Indirect Compliance powered by CoCounsel automatically pulls transaction data from connected systems autonomously, ensuring seamless ingestion of data and automatic initiation of the compliance workflow.
Intelligent algorithms immediately screen for anomalies, like unusual tax amounts and inconsistent records. Most issues are resolved automatically and decisions are documented.
Time required: Only minutes due to automated processing
Risk factors: Dramatically reduced through automated validation
Stage 2 of 3: Validation, corrections, and reconciliation
Traditional manual workflow
Process description: With data compiled, your team begins tedious validation work. They spot-check hundreds of transactions manually, looking for anomalies, including unusual tax rates, inconsistent exemption applications, and unexpected taxable amounts. Each anomaly requires investigation to determine if it’s an error or a legitimate transaction.
Reconciliation is where return preparation stalls. Common reconciliation challenges include timing differences, system synchronisation issues, supplier invoices arriving after the transaction date, FX variances and missed transactions/reports.
For GST credits which turn out to be non-recoverable, there is an added complexity. There include common scenarios such as invalid tax invoices, or partial entitlements. The team manually reviews purchase data and supporting documentation, calculates the GST liability, and prepares accrual entries in a separate process.
Time required: Days per filing period for validation, anomaly investigation, and reconciliation
Risk factors: Manual validation creates compliance vulnerabilities. Under deadline pressure, some issues inevitably slip through. Human reviewers suffer from fatigue, making it so that the hundredth transaction gets less scrutiny than the first.
Touchless compliance workflow
Process description: ONESOURCE Indirect Compliance powered by CoCounsel applies intelligent anomaly detection algorithms to every transaction automatically. Machine learning analyses patterns across the entire dataset, identifying outliers and potential compliance issues before returns are prepared. When anomalies are detected, the AI provides context and a recommended resolution. Most issues are resolved automatically with human approval.
Reconciliation happens proactively throughout the compliance period. Rather than discovering variances at month-end, the AI monitors calculated-versus-collected differences and automatically categorises variances by type – processing known patterns automatically and escalating novel situations with context.
For GST credits which turn out to be non-recoverable, identification and remediation integrates seamlessly into exception management. The system recognises purchase transactions without a valid tax invoice (e.g. invalid GST registration) or are partially creditable and generates the corresponding entries as part of the return preparation workflow.
Time required: Hours focused on exception review rather than days of manual investigation
Risk factors: Dramatically reduced through systematic validation and proactive reconciliation. Automated detection catches issues before they become compliance problems.
Stage 3 of 3: Return preparation and filing
Traditional manual tax compliance workflow
Process description: Return preparation means preparing, potentially, dozens, hundreds, or even thousands of returns simultaneously – each with unique formats and requirements. Manual data entry populates return forms. Reconciliation investigations consume extensive time when calculated tax doesn’t match collected tax.
GST credits which turn out to be non-recoverable, adds complexity through separate identification, validation, and calculation processes.
Risk factors: Traditional return preparation diverts tax professionals from strategic work, trapping them in manual data manipulation and variance investigation. Not only that, but audit risk and the potential for penalties and fines increase if there are inaccuracies picked up by the tax authority.
Time required: Days to weeks depending on jurisdiction count and complexity
Touchless compliance workflow
Process description: Returns are generated automatically using the latest, up-to-date forms. Reconciliation happens proactively throughout the compliance period. Irrecoverable GST identification, calculation and accrual integrate seamlessly into the workflow.
Filing and payment execute automatically through integrated connections, with comprehensive documentation archived systematically.
Time required: Hours (time is mostly used to review and approve)
Risk factors: Significantly reduced through automation. This is verified by Adobe reporting that, “ONESOURCE improved tax filing processes 96%” through an integrated automation approach.
The cumulative impact on indirect tax workflows: A real-world comparison
Early internal research reveals meaningful efficiency gains for organisations leaving manual indirect tax workflows behind. While these numbers represent evolving capabilities, the trajectory is clear.
Traditional manual indirect tax workflow
Sample organisations profiled by Thomson Reuters spent weeks navigating manual compliance processes:
- Small & medium enterprise (916 returns): 14-day compliance cycle managing manual processes across multiple jurisdictions
- Large enterprise (17,994 returns): 30-day compliance cycle coordinating complex, multi-jurisdiction complianced
Touchless compliance workflow
The same sample organisations experienced dramatic efficiency gains:
- Small & medium enterprise (916 returns): 5-day compliance cycle (delivering $25K+ in annual savings)
- Large enterprise (17,994 returns): 11-day compliance cycle (delivering $60K+ in annual savings)
The transformation: Sample organisations profiled by Thomson Reuters had their workflows reduced from 14-30 days to 5-11 days, with enterprises delivering $25k+ to $60K+ in annual savings based on time optimisations alone. This adds up to a 65% reduction in time spent on routine reporting processes, freeing tax professionals to drive strategic value for the business.
These projections reflect ongoing internal research and product development. Actual savings will vary by organisation size, complexity, and current workflows, with many enterprises realising substantially higher value. Refinement will continue, but even at this stage, the efficiency opportunity is evident.
Beyond time: The quality difference in an automated indirect tax workflow
The traditional workflow’s manual nature creates quality risks across five key dimensions that automation eliminates:
- Consistency: Manual processes vary based on who performs them, their workload, and their experience level. Automated workflows deliver consistent results regardless of circumstances.
- Accuracy: Human errors are inevitable in manual data processing. Automated validation and calculation remove this risk from routine transactions.
- Completeness: Manual processes under time pressure may cut corners. Automated workflows execute every step thoroughly, every time.
- Documentation: Manual documentation is often incomplete or created after the fact. Automated workflows generate comprehensive audit trails as an inherent part of processing.
- Scalability: Manual workflows break down as volume increases. Automated workflows scale linearly – processing 10,000 returns takes proportionally the same resources as processing 1,000.
Most organisations find that quality-of-life improvements for tax teams drives rapid adoption. When people see the elimination of tedious manual work, resistance to change disappears quickly.
Frequently asked questions about touchless tax compliance
1. What is touchless tax compliance?
Touchless tax compliance is a new toolkit that provides tax departments with next-generation, professional-grade AI. It liberates teams from the burden of manual data processing, time-consuming issue analysis, and manual resolution, enabling them to focus on reviewing work completed by agents, improving processes, and driving strategic optimisations. For indirect tax compliance, this takes the form of AI-powered systems that handle data extraction, validation, tax calculation, return preparation, and filing with minimal human intervention. The term “touchless” refers to the elimination of manual data manipulation and processing.
2. How much time does tax automation actually save?
Based on actual customer results, organisations save 9-19 days per compliance cycle depending on size and complexity. This translates to a 63-65% reduction in time spent on routine tax compliance activities.
3. What are the main risks of manual tax workflows?
Manual tax workflows create four primary risk categories:
- Data format errors and missed transactions
- Unreconciled e-invoicing and data sets from disparate systems and processes
- Incomplete documentation for audits
- Inability to scale with business growth
These factors combine to create audit risk that is 3x higher than automated solutions.
4. What is ONESOURCE Indirect Compliance powered by CoCounsel?
ONESOURCE Indirect Compliance powered by CoCounsel is an automated tax compliance solution from Thomson Reuters that uses artificial intelligence and machine learning to automate the entire global indirect tax compliance workflow from data processing through filing and payment.
5. Can automated systems handle complex multi-jurisdiction tax scenarios?
Yes. Automated systems like ONESOURCE Indirect Compliance powered by CoCounsel are specifically designed to manage complex, multi-jurisdiction compliance scenarios. supports GST and VAT compliance across markets including Australia, Singapore, the UAE, the USA, and EU countries such as France, Poland, Greece, and Italy – more than 75 countries. In India, Malaysia and Philippines and other such countries, this extends to supporting global capability centre and shared services operations managing compliance centrally across multiple jurisdictions.
