Although expectations remain high, our understanding of the uses and benefits (and limits) of AI is still evolving and improving. That process is underlining that AI’s most compelling USP is not in its capacity to replace human expertise, but to augment and improve it by liberating tax professionals from the drudgery of low-value work and letting them focus more on value-adding activities.

In practice, that means the real value lies in AI’s use in automating repetitive tasks such as data gathering, reconciliation, anomaly detection and compliance monitoring. This is a game changer in the sense that human-led tax compliance is transformed from a mechanistic and procedural function into one where the repetitive tasks are undertaken – faster and with greater levels of accuracy – by AI.

This means companies can begin to develop ways of using AI to support and deliver faster insights into all areas of the business. However, without the correct application of judgment from a tax professional, it becomes impossible to separate the signal from the noise. Only the smart organisations will know when and where to apply human oversight to augment AI.

When it comes to developing, testing and rolling out AI, tax teams should focus on practical pilots and incremental adoption rather than ‘big bang’ transformation. That means developing skills to test projects and hypotheses. It means creating an environment where innovation, failure and learning can sit comfortably together to not only identify new opportunities but also strengthen the tax function’s ability to pivot and develop new solutions.

However, amid the excitement surrounding AI’s potential, there remains a mismatch between expectations and what it can reliably deliver right now. Put simply, while AI offers obvious advantages around increased efficiency, automation and improved decision-making through (tax) data analysis, it can also have disadvantages.
 

These disadvantages have yet to be fully understood or factored into strategy, but they include:

• Job losses

• Data protection risks

• Bias

• Data security and IP issues

• High costs and possible technological dependence.
   

These are real fears and they must be addressed by those making the important decisions.

All of this means tax leaders must navigate between two extremes: the rush to adopt new and exciting technologies to keep pace with the perceived advances of competitors and the imperative to retain control over systems, processes and (particularly) data integrity.

This challenge will also put pressure on organisations to manage their partnerships carefully. Key suppliers and advisers will be embarking on their own AI journeys, so it’s vital that tax compliance leaders take this into account and make sure they aren’t swept along into risky areas or shunted into the slow lane as partners develop their own solutions.
 

All tax leaders currently face challenges around AI. They will know they stand at the threshold of immense change and that getting it wrong may have serious consequences for the organisation as competitors strive towards the adoption of AI.

But with that in mind, it is even more important to move forward courageously and continue to promote the use of new technologies. The journey is the destination, and new opportunities will arise that outweigh the disadvantages.
 

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Read more about the challenges and opportunities facing Tax Compliance professionals in BDO’s Global Tax Outlook report you can download by filling out the form below. 👇🏼