There is a clear shift in thinking among tax and finance professionals about the integration of generative artificial intelligence (GenAI) into their day-to-day operations, according to a new survey by EY.

The findings, based on the responses of around 1,600 chief financial officers (CFOs) and tax leaders, reveal a positive attitude towards the technology, with 87% saying it will make their tax and finance functions more efficient and effective.

A similar survey by EY conducted in 2023 had revealed only 15% of tax and finance professionals believed the technology will have a huge impact on the way they work. The 72% increase this year, according to researchers, is partly due to the mainstream media coming to terms with and realising the full potential of GenAI.

“Tax professionals are early movers in innovating with GenAI because tax is a data-driven, rules-based operation.” 

Raj Sharma, EY Global Managing Partner – Growth & Innovation

“GenAI is redefining tax and finance functions at the most rapid pace I’ve seen, and that pace is only accelerating,” according to Marna Ricker, EY Global Vice Chair – Tax.

But despite this sharp change in attitude, many companies around the globe are very early in their GenAI journeys, researchers say.

Key findings

For the first time since the launch of the yearly survey six years ago, pressure and constraints around costs and budgeting have become the number one concern for tax and finance professionals. The survey has found out that.

• Budget management and cash tax planing are top priorities for professionals. More than half of the respondents said they are looking at their operational models and considering co-sourcing as an alternative.
• Talent shortage in the tax and finance sector is reaching crisis levels, to the extent that leaders are now more open to hiring staff who do not necessarily have a university degree, as long as they have some level of experience.
• With ever-changing legislative and regulatory requirements, firms are struggling to apply the right data strategy. They also lack the right technology to cope with these changes.

With these challenges in mind, the findings reveal a growing appetite for adopting GenAI in order to transform the way the tax and finance industry works, and bring more efficiency to the function. There is a dilemma though, as purchasing and adapting the technology could mean even higher costs and human governance.

True potential of GenAI

A key question confronted is how the technology could transform the tax and finance industry in the long run, and how big the impact could be.

According to EY’s own estimate: “GenAI could increase global GDP by $1.7 trillion to $3.3 trillion over the next decade and have a meaningful impact on more than half of the world’s workforce.”

That is possible because, unlike traditional machine learning, GenAI does not rely on past data and “can, by itself, understand the reasoning and make decisions almost instantaneously across a very broad range of tax activity.”

And how does the technology suit the tax and finance function? Because, according to Raj Sharma, EY Global Managing Partner – Growth & Innovation: “Tax professionals are early movers in innovating with GenAI because tax is a data-driven, rules-based operation.” 

“GenAI is redefining tax and finance functions at the most rapid pace I’ve seen, and that pace is only accelerating”

Marna Ricker, EY Global Vice Chair – Tax.

Whist there is potential, the survey reveals it’s still early days for many firms in their GenAI journey. Three quarters of the respondents have said their integration of GenAI into their functions is either non-existent or exploratory.

But “that usage will likely shift dramatically to the “emergent” and “integrated” categories on the maturity scale over the coming years, with more organizations finding GenAI to be “transformative,” according to the commentary.

The findings also highlight a couple of other reasons why GenAI will be a key influence in the sector. First, tax authorities around the world are increasingly integrating the technology in their functions. It means taxpayers are required to do the same in order to keep pace and provide required data to authorities in real time.

Second, digital tax filing and e-invoicing has changed the reporting requirement for companies. Once again, it’s about reporting specific data to tax authorities in real time in order to comply with certain requirements. And that’s exactly what GenAI is extremely good at doing.

Steps for integrating GenAI

The survey also provides a four-step guide to tax and finance firms who intend to integrate GenAI into their day-to-day operations. Irrespective of where each firm is on its GenAI journey, the survey believes that they should pursue the following four actions:

1. Integrating the technology requires patience, planing and practice. Firms will need to identify use cases, provide data, run pilots and prepare staff for using the technology. They need to act swiftly and smartly, but should not target short-term efficiency only.
2. “Position yourself to realize all the benefits of GenAI and data reuse. This will become increasingly important as regulatory reporting requirements increase and as you manage cost and talent pressures.”
3. Firms need to have a robust strategy in place in order to maintain the talent they will need in the future for their tax and finance operations. They should think about various options such as “internal hiring, working with a service provider, automation and GenAI.”
4. The ever-changing nature of the technology means firms will have to keep re-examining their operational models all the time to keep up with the latest changes and requirements. They could do so by “investing, outsourcing a significant amount of activities, or more commonly, taking a hybrid approach by using external providers on some activities while keeping other activities in-house.”