The impact of AI on tax professionals – Friend or Foe?
In the past few months, Artificial intelligence (AI) has emerged as a transformative force across several industries, including financial/professional services, and the field of tax professionals is no exception. As AI technologies continue to advance, their integration into tax processes has the potential to revolutionize the role of tax professionals. Nevertheless, apart from the benefits/advantages and the future prospects, AI may also create challenges for tax professionals. The question is whether we can reach a point in time where AI will be able to replace tax professionals.
To date, the most known AI tools in the market are the natural language processing tools, which can understand and process human language. The work of the tax professional mainly involves the processing of documents that are written in human language, such as tax laws, circulars, directives, as well as contracts and supporting evidence of transactions implemented by taxpayers. Hence, if used wisely, natural language processing AI tools can enhance the efficiency and the capabilities of the tax professionals.
Some of the key benefits/advantages of making use of AI as tax professionals are the following:
Enhanced Data Analysis and Processing
One of the key areas where AI can significantly impact tax professionals is in data analysis and processing. AI-powered algorithms can automate the collection, organization, and interpretation of vast amounts of financial and tax-related data. By leveraging machine learning and natural language processing techniques, AI systems can quickly identify patterns, anomalies, and potential risks in complex tax data sets.
This advanced data analysis capability enables tax professionals to gain valuable insights and make informed decisions more efficiently, while focusing their expertise on strategic tax planning. AI augments the tax professional’s role by handling time-consuming manual tasks, allowing them to devote more time to value-added activities.
Improved Tax Compliance
Tax compliance is a critical aspect of every organization, and AI can play a vital role in ensuring accuracy and minimizing risks and errors. AI-powered systems can monitor and interpret changing tax regulations, automatically updating tax calculations and identifying potential compliance issues. By leveraging historical data and machine learning algorithms, AI can predict and flag potential areas of non-compliance, enabling tax professionals to address them promptly.
Automation of Routine Tasks
AI’s ability to automate routine and repetitive tasks such as data entry, document classification, data validation and document submission is another significant benefit for tax professionals. This automation not only saves time but also reduces the chances of human error, enhancing the accuracy and reliability of tax-related processes.
Moreover, AI-powered chatbots and virtual assistants can interact with clients, providing real-time answers to common tax-related queries, although it is unlikely that such a chatbot will be able to apply critical thinking to a scenario, as it cannot replicate human intelligence.
Despite all the benefits outlined above, AI should be viewed as a tool that enhances the capabilities of tax professionals rather than replacing them entirely. The expertise, critical thinking, and strategic insights provided by tax professionals under complex scenarios will remain invaluable.
The future of tax professionals in the age of AI is promising. As technology continues to advance, AI systems will become more sophisticated, capable of handling complex tax issues and providing advanced analytics. Tax professionals will have access to real-time insights, enabling them to offer proactive tax planning and tax risk mitigation strategies to their clients. With proper upskilling and by being adaptable and leveraging AI technologies effectively, the tax professionals can enhance their efficiency, accuracy, and overall value proposition.
Senior Manager, Tax Services