Generative artificial intelligence (GenAI) is beginning to penetrate the tax profession, promising substantial transformations in operational practices.
Despite initial concerns among professionals regarding accuracy and potential misuse, there is widespread optimism about GenAI’s capacity to streamline workflows and reduce time spent on repetitive tasks.
According to the Thomson Reuters Institute’s 2024 Generative AI in Professional Services report, professionals view GenAI positively, foreseeing numerous current and future benefits for tax and accounting practices. By leveraging GenAI, tax firms and departments can potentially expand service offerings, particularly in advisory capacities, leading to significant shifts in pricing strategies.
Zach Warren, who led the report, discusses the current state of GenAI adoption within tax firms and its implications:
Question: How extensively have tax firms embraced GenAI so far?
Warren: Our survey indicates that only about 10% of tax firms have adopted generative AI extensively; it remains largely in the exploration phase. Historically, the tax sector has been cautious about embracing new technologies due to regulatory concerns and risk aversion. However, those who have implemented GenAI are utilizing it across various functions such as tax return preparation, client research, general accounting, bookkeeping, and compliance. Despite these advancements, discussions around GenAI in contractual contexts like RFPs are minimal, indicating early-stage adoption within the profession.
Question: How could GenAI benefit tax firms?
Warren: One of the primary challenges facing the tax profession is workforce shortages amidst increasing complexities. GenAI offers a pathway to achieve more with fewer resources, thereby enhancing operational efficiency. Specific regulatory challenges, like the forthcoming Pillar 2 Regulation, are expected to necessitate significant process changes, where GenAI can play a crucial role in ensuring compliance across global frameworks. Additionally, the shift towards electronic invoicing in many jurisdictions underscores the need for advanced data management solutions, where GenAI can aid in organizing and maintaining compliance.
Question: Do clients anticipate faster service and reduced fees through GenAI?
Warren: According to our report, a majority of corporate tax departments express expectations for their external firms to adopt GenAI technologies, anticipating enhanced efficiency and potentially lower costs. While clients are increasingly supportive of technology-driven efficiencies, the ultimate distribution of these benefits between clients and firms remains a critical consideration. Nonetheless, the consensus is growing that GenAI will be instrumental in meeting client demands for quicker turnarounds and cost-effectiveness in tax services.
In conclusion, while GenAI’s integration into tax practices is still in its early stages, its potential to revolutionize operations and meet evolving regulatory demands is gaining traction among professionals and clients alike. As technology continues to advance, tax firms are poised to leverage GenAI to navigate complexities and deliver enhanced value to their clients efficiently.
Source: tax.thomsonreuters.com
