Vertex’s tax-intelligent approach to AI

Artificial intelligence (AI) and generative AI (GenAI) will have meaningful and lasting impacts on corporate tax groups and the tax automation they use to accelerate global commerce. AI’s conversational interfaces can empower indirect tax groups to harvest new insights more efficiently than ever before.  

Before assessing the tax benefits AI can deliver, it’s important to consider how Vertex empowers our customers to use AI in optimal ways given their unique tax compliance challenges and governance structures.  

Vertex continually puts emerging technologies through their paces to learn more about their relevance for tax groups, and GenAI is no different on that count. Here are the principles that govern our AI-related development, along with insights we’ve gleaned from our work so far:  

• AI is a game-changer: We believe that AI will have pervasive impacts across all industries and organisational functions, including tax departments. Yes, AI has generated lots of excitement in the past 12 months thanks, in large part, to advances in GenAI. That said, the value of it is real. We’re already seeing profound impacts in 1) how we can use AI to advance our ability to serve customers; and 2) how we can integrate AI into new and existing products to help customers gain even more value from our offerings. We’re currently pursuing efforts that support both objectives.  
• We’re committed to a thoughtful approach: Vertex is not rushing into the AI market. Nor are we taking a wait-and-see stance. Instead, we consistently apply AI in measured use cases, evaluate results, make adjustments and explore new applications. As powerful as AI is, it is not a cure-all. It applies to some tax use cases, while other advanced technologies are more appropriate for other use cases. We're learning about AI applications in taxation and applying control frameworks for fortifying data privacy, security and ensuring responsible use. 
• Control in crucial: AI is evolving and advancing faster than any other technology the world has experienced. The dynamic nature of AI (along with the risk of errors and undetected biases) make it critical to strike the right risk/reward balance. Data security and privacy reside at the core of Vertex’s AI development lifecycle. We constantly monitor and adjust the control framework supporting our development activities to ensure the efficacy of our governance and controls. We’re also keenly aware of the regulated nature of the tax profession. Tax departments must comply with all relevant jurisdictional regulations and they certainly can’t blame AI if something goes wrong. Tax groups are accountable and responsible, and so are we. 
• Users should decide how much AI to use: We firmly believe that our customers and end users need to be in command of their AI usage, allowing them the ability to dial their usage up and down as needed. That’s why Vertex is committed to joining our customers on their AI journey to ensure that they have control every step of the way. We know that many organisations want to review AI-generated results before bringing new capabilities online. Our AI-related collaborations with customers also have shown us that very few organisations want a magical “black box” solution. Instead, they want to understand what’s occurring inside the black box. We’re establishing that transparency.  
• Human intelligence is more important than ever before: Human intelligence paired with AI drives accountability and decision intelligence. While AI is good at revealing patterns and insights, humans possess unique abilities that stem from our years of experience and our complex and nuanced understanding of the world. This enables strategic decisions that are based not only on the data, but also on a broader understanding of distinctive situations, which is needed in the tax domain. Using AI, we can gather and process data to identify trends and patterns. However, turning these insights into tactical actions requires a nuanced understanding of the business, the industry and the market climate – it requires human intelligence. Vertex understands the power of the collaboration between human intelligence and AI and is looking at how to continue to responsibly enable it in our solutions. 

GenAI as well as other forms of AI and machine learning will play a growing role in tax technology transformations in 2024 and beyond. That’s why it’s important to get a feel for not only what Vertex and other solutions providers are doing with AI but also how we’re doing it.