Enterprises are constantly seeking ways to optimize financial performance and improve cash flow. Indirect tax, often overlooked, represents a significant, yet often invisible, cash flow component for global organizations. Studies reveal that VAT and other indirect taxes can account for 10% or more of total revenue. For a $1 billion company, that's roughly $100 million managed through systems which must be accurate from the outset, every single time. When these processes depend on manual tasks and fragile integrations, the risk of financial errors escalates, leading to audits, penalties, rework, and avoidable revenue leakage.

In today's environment of real-time digital reporting and e-invoicing, technological agility is no longer a luxury; it's a fundamental financial necessity. So, how can enterprises optimise VAT recovery with modern technology? See our Full Guide for a deeper dive into specific platform reviews, but this article will provide strategic insights for global business leaders.

The Current State of Tax Technology: An Uneven Landscape

The good news is that optimism surrounding tax technology is growing. According to the Thomson Reuters 2025 State of Corporate Tax Department report, a significant 94% of corporate tax professionals are hopeful or excited about the future of tax technology, and a substantial 74% anticipate increased tech budgets over the next three to five years.

However, the journey toward optimized tax processes is far from complete. More than half of tax departments still perceive their operations as either chaotic or reactive, with only a small fraction (6%) claiming to be optimized or predictive. Larger companies report greater progress, with approximately 46% describing their approach as proactive. In contrast, smaller organizations face a widening maturity gap, with only 22% reporting similar progress.

This uneven progress underscores the urgent need for enterprises to strategically leverage technology to streamline VAT recovery and ensure compliance.

Six Strategic Steps to Increase Technology Agility in VAT Recovery

To effectively optimize VAT recovery, enterprises should consider the following six strategic steps:

  1. Embrace Cloud-Based Indirect Tax Platforms: Cloud-based platforms offer a centralized and automated approach to managing indirect taxes. These platforms integrate seamlessly with existing ERP systems, eliminating up to 95% of manual processes, custom coding, and workarounds. By automating tasks such as data extraction, validation, and reporting, these platforms free up valuable IT resources and reduce compliance friction.

  2. Automate Repeatable Processes: Automating repetitive tasks, such as invoice processing, data entry, and reconciliation, can significantly reduce errors and improve efficiency. 74% of tax leaders say automating repeatable processes is a medium or high priority. Robotic Process Automation (RPA) and AI-powered tools can be used to automate these tasks, freeing up tax professionals to focus on higher-value activities such as strategic planning and analysis.

  3. Leverage AI and Machine Learning: The future of VAT recovery is undeniably intertwined with AI. A significant 88% of tax leaders believe that AI will become central to workflows within five years. AI and machine learning can be used to identify patterns, detect anomalies, and predict potential risks in VAT data. These technologies can also automate complex tasks such as tax code classification and audit preparation, leading to improved accuracy and faster turnaround times. The Trust in AI Alliance is a good place to start developing shared approaches for building trustworthy agentic AI.

  4. Integrate Data Across Systems: Seamless data integration is crucial for accurate and efficient VAT recovery. Enterprises should integrate their tax platforms with ERP systems, accounting software, and other relevant data sources. This integration eliminates data silos, ensures data consistency, and provides a comprehensive view of VAT-related transactions. It also facilitates real-time reporting and analysis, enabling enterprises to make informed decisions based on accurate data.

  5. Prioritize Data Quality: Accurate and reliable data is the foundation of effective VAT recovery. Enterprises should implement data quality controls to ensure that VAT-related data is complete, accurate, and consistent. This includes implementing data validation rules, performing regular data audits, and providing training to employees on proper data entry procedures.

  6. Empower the Tax Department: Autonomy and budget ownership are decisive for speed. The 2025 State of Corporate Tax Department report shows that 70% of tax departments say they can make independent technology purchases, a strong signal that tax can and should lean on solutions that reduce risk and improve ROI. Regardless of the funding model, momentum is building, and empowering the tax department to make independent technology decisions is crucial for successful VAT recovery optimization.

The ROI of Modern VAT Recovery Technology

The benefits of investing in modern VAT recovery technology are significant and measurable. As highlighted in Forrester’s "The Total Economic Impact of Thomas Reuters ONESOURCE Indirect Tax," organizations implementing ONESOURCE Indirect Tax achieved a 120% three-year ROI with a 15-month payback period. These organizations also experienced:

  • Reduced invoice error rates from 3% to below 1%.
  • Reallocated up to 50% of compliance team effort to higher-value work.
  • Lowered IT maintenance effort through automated content updates.

These are tangible results that demonstrate the power of technology to transform VAT recovery from a reactive, compliance-driven process into a proactive, strategic function.

Conclusion: Seizing the Opportunity

Regulators are increasingly shifting towards real-time digital reporting, intensifying scrutiny and accelerating change cycles. Legacy and spreadsheet-heavy processes are simply not equipped to keep pace. Every month of delay extends audit exposure and limits growth opportunities into new products or markets.

Indirect tax is becoming increasingly digital and more critical to enterprise performance. The encouraging news is that tax leaders already possess the mandate, growing budgets, and proven ROI justifications to take action.

By following the money, taking ownership of the business case, and scaling modern, cloud-first platforms, indirect tax professionals can transform compliance into a strategic, tech-agile capability that safeguards cash flow, accelerates growth, and strengthens the entire finance function. The transition from reactive to proactive is achievable, and the financial rationale has never been more compelling. Now is the time for enterprises to embrace modern technology and unlock the full potential of VAT recovery.