AI innovation ‘future-proofing’ businesses, says EY

Based on a recent survey, almost nine in 10 (86 per cent) tax professionals say leveraging data, generative AI, and technology is their top priority, and that leaders expect AI will free up 23 per cent more budget for strategic activities.

For this study, the Tax and Finance Operations (TFO) Survey, EY collected responses from 1,600 chief financial officers, senior finance and tax leaders, in 30 jurisdictions and 22 industries to explore the adaptations that tax and finance functions are undergoing in an evolving environment.

Tax and operate leader at EY Global, Stuart Lang, highlighted the increasingly complex and constant disruption the industry is facing. Lang found that tax and finance leaders are “embedding agility into their core operating models,” stressing the need for them to have an “always-on approach” to new technology and shifts in regulation and geopolitics.

Pillar Two

The survey found that recently, the implementation of Pillar Two global minimum taxes is the most significant legislative and regulatory change that is impacting organisations (81 per cent), beating tariffs, country-level tax reform and e-invoicing.

The research revealed that 85 per cent of those surveyed said that their tax liability will increase overall as a result of Pillar Two. However, only one in five (21 per cent) said that they were “very prepared” to comply with the requirements of the Pillar Two global minimum.

Struggling to make AI-led efficiencies

In addition, the findings revealed that many respondents struggled to develop their own solutions, with nearly four in five (78 per cent) respondents reporting that working with a deep AI-capable third-party provider in the next two years would moderately or significantly benefit their tax function.

“In a tax world, data is queen – especially when effectively paired with AI,” vice chair of tax at EY global, Marna Ricker, said. Clean, organised, and accessible data must work hand in hand with AI, and be seamlessly integrated for maximum efficiency, allowing for more time to prioritise strategic tasks “that really move the needle,” Ricker added.

However, Ricker warned: “Without the right foundations, its true potential remains out of reach.”

Reshaping talent strategies

Its findings also revealed that 61 per cent of respondents predicted that their functions would be “significantly impacted” when their senior tax professional retires, while 66 per cent said that fewer new accountants entering the industry would lead to talent supply issues.

The report also found that respondents reported that while they are spending 53 per cent of their time on routine activities, they would prefer spending closer to 21 per cent. They also reported a desire to double the amount of time they currently spend on higher-value specialised tasks.

Additionally, the data revealed that many respondents are reskilling and investing in their teams – 73 per cent prioritised hiring data scientists and tax technology experts, 89 per cent invested in upskilling and reskilling existing staff, while 83 per cent sourced external experts to build an AI-literate workforce.

A ‘new breed’ of professionals is needed

A “new breed” of professionals is needed by tax and finance functions, Dave Helmer, managed services partner at EY global, said. These staff must be able to “link judgement, critical thinking, transformation, and data and technology with excellent tax technical skills.”

“Centring AI in workforce transformation is crucial for bridging this gap and creating agile, future-ready tax and finance teams.”

“The workforce of the future will be built on teams that can unlock the power of innovation, seamlessly integrating new technologies to deliver strategic value where it matters most.”