Case study

How Handl helped a tax automation service in Colombia reduce document recognition time by 80%

We’ve never been to Colombia, nor do we speak Spanish, but that didn’t stop us from building a document recognition system that is 99.9 % accurate

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Latin America (Colombia, Venezuela, Chile and Brazil) has a progressive income tax scale, and employees must calculate and file their own tax returns. For highly paid employees the income tax can scale up to 33%, and its rate is gradually increasing in tandem with the rate of inflation. There are, of course, tax exemptions, but they are quite difficult to calculate and justify without qualified support.

Because of this, the region has a large market of tax consultants. They help calculate the taxes accurately, file tax returns on time, and, where possible, reduce the total amount. These consultants request documents from customers, extract data from them, fill out reports and send them to the tax authorities. This is a long and arduous process, and during peak times the preparation can take several days. In worst cases, it’s possible for deadlines to be missed, causing the clients to receive a penalty for not submitting their taxes on time.

The sheer number of format variability and the absolute chaos of the types of documents that need to be submitted is only making matters worse. In Colombia, there are more than 50 kinds of certificates, statements, and other papers that are constantly changing and being updated. You can get the documents all right one year, only to find in a few months that their format has changed.

The startup Tributi simplifies the process of submitting the tax returns: thanks to an intuitive interface, anyone can quickly draft a tax return without any knowledge of accounting or tax rules. It takes about two hours to complete the whole form, and the company guarantees to file on time.

By 2020, the company has been growing 400 % a year — much faster than its competitors. As business grew, so did the number of user filings. Tributi urgently sought an automated document processing solution to keep its growth rate and customers on track. The company required a fast and practically faultless algorithm whose results didn't need to be verified.

This is where we come in

We’ve been in the document recognition space for a long time, but Tributi’s task was definitely one of the most challenging in our practice.

We needed to recognize documents with impeccable accuracy — over 99 % per field. This is a critical metric when the customers’ financial information and the credibility of our partner is at stake. Even spaces between characters had to be accounted for considering different context: incorrectly recognizing the number “99 740” as two numbers instead of one would render the entire document faulty.

Human validation was not an option, so the mentioned accuracy had to be achieved with only algorithms. Not having the safety net of human validation made this project much more challenging from both the product and technology development points of view.

We split the development into two stages: a proof of concept, where we achieved recognition accuracy ofer 95 % per field, and production, where we took the accuracy metric to the aforementioned 99 % per field. If you’re reading this, then we are already at this second stage.

With the key metrics achieved, the finished solution is deployed on-cloud and is used by Tributi for a subscription fee. Naturally, we stay in close communication with the client for tech support and further improvement of the solution in the ever-changing environment of Colombian taxation paperwork.

What we ourselves find incredible, is that the whole project was done 100 % remotely, from contract negotiation to solution creation, testing, deployment and maintenance. It's awesome that such important and complex projects can be done remotely without losing quality or speed along the way.

We now handle more than 250,000 pages every 6-month tax period, and we're going to handle a lot more.

The results

Time to file a tax return after implementing Handl algorithms has been sped up by 80 %, and 100 % of documents are processed automatically with 99.9 % accuracy.

The solution works in real time without the need to control recognition quality. Tributi now successfully manages seasonal tax peaks and maintains the highest level of customer service.

As for us — we're looking at other countries with similar tax systems and paperwork chaos. For example, Brazil with a population of 213 million people looks like a tempting market. What’s clear is that our algorithms still have tons of work cut out for them!

100 %

Automation of classification and digitalization of 35 types of documents in real-time

80 %

Tax filing time reduction

99 %

Human errors reduction

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So you can focus on the work you love

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