Key Steps to Integrate AI into Your Tax Function

Key Steps to Integrate AI into Your Tax Function

AI is typically defined as a machine’s ability to perform the cognitive functions typically associated with human minds, such as understanding, reasoning, problem solving, learning, and even interacting with the surrounding environment. Imagine AI’s potential to take over the mundane tasks that tax professionals currently handle, freeing their time to be more creative and perform the strategic tasks that machines cannot. How many man-hours would tax departments save if tax classification work could be automated? If millions of transaction records could be processed within seconds? This may seem like science fiction, but with AI’s almost unlimited capabilities, AI is poised to revolutionize the tax function. In fact, according to Accenture, the impact of AI technologies is projected to increase labor productivity by up to 40%.

Convinced? Here are some key steps to integrate AI into your tax function:

Have a data strategy

The first step is to take a step back and strategize your business needs. What tax-related functions could be better performed or augmented through the use of AI? Which activities are repetitive or error-prone, where automation can make your employees become more efficient? Are there specific areas that can be outsourced vs. remaining in house? Whether you’re building a new business or improving a current business, identify problems you want AI to solve.

Assess value of AI to your business

To develop a deeper understanding of how AI can help solve business challenges, consider a specific challenge that is both important and likely to be solved via the use of AI. Maybe it’s a piece of mission- critical business data that is currently inaccessible, T&E invoices that are fraudulent, or transactions most likely to trigger an audit. Investigate whether AI can be used to solve the challenge wither via automation or augmentation. Automation can improve overall productivity and performance by streamlining tasks too time consuming for humans, such as combing through individual invoices or transactions. In situations where automation is not feasible, AI-augmented processes can assist tax professionals in doing their jobs, such as smarter decision-making.

Teach the machine – tag data sets via tax experts

AI projects must be trained before they can deliver actionable results. The key to developing practical use cases is to seek opportunities to “tag” data with expected outcomes generated by human experts. These data sets can be then used to train the AI solution until it gets satisfactory results on your test data. For example, Facebook’s millions of tagged human faces on its platform allowed it to more easily train algorithms to identify specific human faces. Google gauges the usefulness and relevance of its search results based on a wide range of factors, and then trains its algorithms to learn from this data in real-time. In finance, credit card companies use the tagged instances of fraud to predict other transactions that are most likely to be fraud.

Change management

Transforming into an AI-based organization is a big step, and you must implement a strong change management strategy to ensure your success. Some important steps are to clearly explain the benefits of AI, provide ample training to ensure maximum end-user adoption, and roll out a new solution slowly while gathering feedback for improvement.

Eliminate barriers

Deloitte cites specific obstacles to AI adoption: lack of qualified staff, still-evolving tools and frameworks, and a lack of large datasets required to train algorithms. AI success is based on having a large repository of valid data, but unfortunately most companies do not have the right data practices. In addition, make sure you invest in qualified resources to harness your data. According to a 2017 report by IDC and DataRobot, 73% of organizations lack an in-house AI specialist or data scientist.

Consider pilot projects with 3-rd party experts

Sometimes hiring the right people or developing your own AI-based solution is not the quickest route to results.  For tax departments, this might mean partnering with the enterprise’s finance and IT departments, consulting with tax and data management technology experts, or outsourcing to an existing third-party software solution.

A new tax ecosystem is emerging

The global tax function and its operating principles are ripe for disruption, with a new tax ecosystem slowly emerging. Automation and AI are the key drivers, already having digitized and automated routine tax compliance to a certain extent. And the ball has already begun rolling.  Deloitte is investing in AI and data analytics to ensure compliance while responding to frequently asked questions related to tax. In 2017, IBM Watson partnered with H&R Block to reinvent tax preparation. PwC views AI as a tool that can automate routine and time-consuming tasks for tax experts. With the AI revolution well underway, it is critical for tax professionals within your organization to understand how to integrate AI into their everyday roles.

If you’d like to learn more about how your company can utilize the power of AI to automate your VAT related transactions, VATBox can help. VATBox is an automated, enterprise-wide, cloud-based VAT recovery solution that has successfully streamlined the global VAT recovery process, providing businesses with unrivaled visibility, compliance, and data integrity, and ultimately boosting its bottom line. Let us show you how your company can thrive in today’s complex financial times.


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