Evaluating (and improving) your ‘AI tax readiness’

By now, most organisations have at least tinkered with generative artificial intelligence (GenAI) tools and other AI applications. With that in mind, BDO’s tax technology experts ask whether tax groups are ready to harness the substantial value that AI can add to a host of tax management activities.   

The BDO co-authors stress that sturdy risk management guardrails should govern tax’s use of AI. The data that GenAI applications use to train must be clean and accurate, for example. Tax leaders should recognise how easy it is for users to become overly dependent on AI recommendations, without validating those outputs and performing “reasonable checks”. Plus, AI-related regulation lags behind its use and development (a dynamic that often occurs with groundbreaking technological advances). Tax leaders should keep an eye on developing AI regulations while working with their IT and IT-security partners to ensure that cybersecurity vulnerabilities are identified and mitigated (e.g. via robust access controls and related measures). 

With those considerations and controls addressed, tax groups can put AI functionality and applications through their paces. As I’ve written about before, AI technologies will yield substantial value from a tax automation perspective. It can strengthen content curation; enable powerful AI copilots that answer end-users’ questions quickly, accurately and conversationally; and generate new insights from large volumes of tax data. BDO’s experts describe similar benefits, stressing that AI can help tax teams achieve efficiency gains, develop new operating models, produce advanced data insights and improve talent acquisition and retention.  

Considering the tax talent crunch, those recruiting and retention benefits caught my eye: “AI can also deliver a tangible impact to talent acquisition and retention,” according to the article. “New technology requires new skill sets, and while existing tax professionals will work to build their proficiency with AI, the door is also open for new tax professionals who already possess knowledge of AI tools to establish themselves in an evolving role. AI can act as a learning assistant to new employees, helping them bridge knowledge gaps and get up to speed in their new positions.” 

What do tax groups need to do to improve their AI-tax readiness? BDO suggests taking the following steps: 

• Assessing the tax group’s maturity level and the quality of existing tax data; 
• Selecting smaller, low-risk AI use cases early on to stimulate learning and instil comfort; 
• Identify where and how AI fits into their tax technology strategies; 
• Assessing how existing recruiting, retention and training/development activities within tax groups might benefit from AI; and 
• Working closely with IT to ensure that AI-related risks are managed and effective governance is in place. 

With the right tax technology road map in place, tax teams can deploy GenAI tools to improve many aspects of their tax compliance, planning and talent management activities. For more on this topic (including its impact on the tax technology industry), listen to my interview on BDO’s Tax at the Speed of Tech podcast series.