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How artificial intelligence will transform tax

This two-part episode of Tax and Law in Focus podcast explores the opportunities and challenges that GenAI will create for tax leaders.

Susannah Streeter

Hello and welcome to the EY Tax and Law in Focus podcast. I'm Streeter, and in this edition, we're going to be finding out how artificial intelligence, and specifically generative AI, has the potential to revolutionize the world of techs, perhaps even beyond our wildest imaginations. There are already big changes taking place. So-called GenAI copilots are already in use, sitting beside the tax practitioner, enabling non-IT specialists to analyze and manipulate core data sets, generating powerful insights. But there is so much more potential. EY research shows that the typical tax team spend somewhere between 40% and 70% of their total time gathering and manipulating data. Tax teams face increasing levels of complexity around regulation and real-time reporting, downward pressure on budgets, and increased costs of keeping tech updated. Then there's the ongoing headache of the growing skills gap, an insufficient number of practitioners with the experience to meet the demands of tax authorities. We're going to explore how, in the near future, GenAI will be able to help solve many of these challenges. I'm really delighted to say we have a panel of subject matter experts who are uniquely placed to offer insights into the opportunities which are there to be seized and why they could make such a difference to the tax function.

Streeter

But before I introduce them, please remember, conversations during this podcast should not be relied on as accounting, legal, investment, nor other professional advice. Listeners must, of course, consult their own advisors. Now, we have so much to talk about. We're going to split this subject into two episodes. In round one, I'm very delighted to welcome Ricker, EY Global Vice Chair, Tax. Hello, Marna. Where are you today?

Marna Ricker

I am in Minneapolis and happy to be here.

Streeter

Fantastic. Great to have you with us. Also, welcome to Garcia Cure, who is EY Global AI Tax Leader. Hello there, Catalina. Where are you joining us from?

Catalina Garcia Cure

Hi, everyone. I'm joining from the coffee region in Colombia.

Streeter

Fantastic. Great to have you with us. And welcome to Duncan, Head of Thought Leadership on the Future of Work from Microsoft. Where in the world are you, Matthew?

Matthew Duncan

Hello, everyone. I'm actually out here in Seattle, Washington.

Streeter

Great to have you on this podcast. So much to talk about. And finally, a warm welcome to Campbell, EY Americas Tax Technology and Transformation Leader. Where are you speaking to us today from?

Daren Campbell

I'm joining us from Washington, DC.

Streeter

A warm welcome to all of you. We're going to cover so many different subjects, but let's look at the current state of play with regards to why AI could be such a game changer for tax leaders. Marna, let me start with you. How would you say GenAI is changing, challenging, and transforming the tax world?

Ricker

Thank you, Susannah. It's really having an impact on every single thing we're doing. Whether that's tax authorities or corporations, it's all about how we record tax, how we report tax, how we pay tax, and how we collect tax. It's around data; it's how we support and advise our businesses and the decisions they're ultimately making. There's an enormous amount of pressure out there. You said that in your introduction, from global tax policy changes to increasing tax collections and controversy and talent shortages. We're going to get into that conversation and how GenAI is really changing and helping there. There's economic uncertainty, geopolitical uncertainty. There's a lot going on for tax departments, and GenAI is making a really big difference around that. As you're getting into this topic, there's a tendency to look at really short-term efficiency gains in my counsel. We'll all talk about this as you have to look at long-term transformation. What really can you do within your department, within your people, to get after a long-term impact?

Streeter

Absolutely. We're going to be looking at those long-term gains as well. But what would you say the value that you're already seeing from GenAI for clients, as well as the business you lead at EY?

Ricker

There are three big things. So the first is just the everyday tools. Like, what are we doing every single day? So think desktops and platforms and technology tools and hands-on keyboards. And Microsoft has amazing things, things we're already using in copilots, helpers built right into those desktops and the tools that we're using. And think tax advice. And so really amplifying the technical expertise of our talent. Really amplifying, pumping that up, making it even better if it could get any better. Then, think really about that compliance and reporting piece. There's a lot of data that we use in that process. Think about those process becoming really, really efficient and really quick and really accurate. Pushing the boundaries around those pieces. Those are the big three I'd want you thinking about when we think about what it's already doing for our business anyway.

Streeter

Marna, thank you very much for the moment. Let me bring in Matthew. Matthew, do you at Microsoft have a feel for those industries and indeed departments or functions within organizations which are early adopters and those which are laggards?

Duncan

Well, we're seeing adoption growing across all industries, specifically those with a large percentage of information workers. It's where GenAI becomes that personal assistant that truly augments and takes away the mundane tasks and accelerates productivity, such as consultation or analysis. We're finding that legal and tax professionals are, in many regards, leaders in this AI transformation. There's definitely a mindset, those organizations that look at this as a true opportunity to reinvent and rethink the way they're doing their business versus those that are standing back on their heels a bit and just questioning, is this just another technology trend?

Streeter

Thanks, Matthew. Catalina, to what extent do you think tax leaders think GenAI can provide solutions? Are they underestimating the possibilities?

Garcia Cure

A hundred percent. There's a lot of underestimation. We're seeing that the level of awareness and interest of tax leaders in the potential of generative AI is definitely increasing. There's a very clear tendency to underestimate the full scope of its capabilities. Some people think that this is due to the natural caution that surrounds our field, but I think that it is primarily due to a combination of two factors. The first one is its lack of exposure to those applications that are truly, truly transformative. The second one, which we see every day with our clients, our role is to really clarify this point, which is that Generative AI is not just a more advanced version of classical machine learning. One very common reaction that we get from our clients is, yes, but we already tried to do that with AI, and we've been working on that. But no, let's say that generative AI is a subset of AI, but what it can do is fundamentally different, almost as if you were talking from the user end or the company as a completely different technology in terms of what it can achieve.

Garcia Cure

We are not used to working with something that can process our language and mimic our creativity. Across the globe, we're working with clients in use case discovery to help them understand the differences. So, machine learning in the tax function followed specific rules for finding patterns and predicting based on past data. But Generative AI can now, by itself, understand the reason and make decisions across a very broad range of complex tax activity. I'll give you an example. It's a real example from a client, but it also helps us bring awareness to other clients. If you tell them you have a process, and you're manually and in a very slow way, so two weeks more or less, mapping provision data from multiple jurisdictions to a model that was taking two weeks and the effort of 6-8 people, as I just mentioned, and now it takes minutes. Our role is really to help our clients understand these possibilities. When they see it, they cannot unsee it.

Streeter

Amazing. So, Daren, Catalina is outlining there that leaders are underestimating the possibilities, and there is such potential out there. From your experience, do you think tax leaders are preparing their teams sufficiently to leverage the power of GenAI, given that so many are underestimating it?

Campbell

I would definitely agree that many of the leaders are underestimating the power of AI. We are seeing many companies that are on the journey, but most are just getting started. They're just in the early stages. We see that in two forms. One is around training. They're providing basic training on what it is, trying to help their teams understand what it is and some of the art of the possible around it. One of the areas that they're focused on with the training is around prompt engineering, really how to communicate with the AI. This is a different way that we're interacting with the technology than we've ever interacted before. That is one of the areas that we're seeing a lot of focus on, and I would agree with that focus. I think that's going to be a critical skill set. How we interact with the AI is going to be really, really important. I agree with that focus. The other thing that we see, as Catalina talked about, is looking for initial use cases. Tax is really ripe. There's a lot of low-hanging fruit that can be picked up with AI. They're beginning to look at how we still continue with our existing processes, but we find a point problem in bringing AI to that solution.

Campbell

We don't yet see that many that have moved on in the journey where they're really looking at the transformative power of AI. There are a few, but one of the things is that as companies progress and go through the cycle of basic awareness and beginning to identify point solutions, the next stage is really looking at how this becomes more transformative. One of the gaps that we have in tax is around data. We do have a few companies that are beginning to realize that and really beginning to look at the data life cycle, beginning to look at their data sources and how they're managing data as an asset within the organization. Then, looking at this also being transformative, looking at changing their operating models. I think one of the things that's really key as we talk about the transformative nature of AI is really a shift. This isn't just implementing technology into the existing processes. This is really around rethinking those processes. There's a framework that I like around this. What we're doing right now is we have people who are executing processes that are presented with data that's powered by technology.

Campbell

The AI shift is technology will be powered by data, and it's executing those processes that are managed by people. I think that's really key. There is a fundamental shift that we're undertaking of moving from people executing the processes to really the technology executing the process with the people managing those. That's a transformative shift. If we look at where people are today, we're on the very early side of that. We haven't really seen that, but that will be a critical step as we move to AI transforming the way that we do business.

Streeter

Okay, so Marna, Daren's talking there about transformative power and rethinking processes. Let's dive down into what concrete changes we could see due to GenAI, not just for the tax function but also how you could influence operations across broader organizations.

Ricker

I love that, and I get to work with Daren every day, which is one of the best parts of my job. One of the ambitions, certainly, that we have, and we're seeing it already inside our own organization, but certainly one of the things that we're seeing with some of the cutting edge departments that Daren's talking about is the ability to take that data. Look, remember, tax deals with the lowest level transactional data within an organization. Because that's where you have to report tax. Think about a VAT tax or invoicing. We have to report tax at source of a transaction for a company. That data is rich with insights for an organization. And the cutting-edge tax departments know that. And so they're really, really looking at ways to provide good business insights right back to the company. And so you see things about the business inside that data. And so the ones that are doing exactly what Daren was talking about, letting technology lead the data process, letting humans manage that process, use the judgment piece of that, as opposed to doing that actual work hands-on keyboards. And so the tax departments can do that and then use that data to provide insights back to a business unit about their product or about something they're seeing in the data itself, I think, are going to provide extraordinary value back to the organization.

Ricker

That's really what we're starting to see in the heading edge departments. It's also what we're doing here at EY. Again, tax is becoming the epicenter of data within our own organization that we're able to then use to provide value back to all of our different service lines in the entire organization. That's the power. That AI has the ability itself to summarize vast amounts of information, to extract extraordinary pivot tables and details and extensive documentation and data sets and efficient comparisons and predictive about what's going to come next or what it's seen in the past. And so that's what we're getting in these refined insights and refined information. And that's what's really, really powerful. So it's got some limitless possibilities. I don't even want to predict. I'll let Matthew do a little bit of that, predicting what might come next for us. But I'm really trying not to limit its power within our own organization.

Streeter

Well, let me bring in Matthew. What's your take on the potential for this limitless possibility? Do you think companies are underestimating the level of value that could be created and how overhead costs could be limited?

Duncan

Yes, I'm very much aligned with exactly what Daren and Marna had just spoken about. We see this role of AI in three areas. One, it's definitely on this personal AI. What does it mean for the end individual, and how does this augment and truly make their work or amplify their expertise from going from good to exceptional? Then we see this foundational or functional AI happening at this department level where it's integrated into the patterns of work, how we work as teams and within those organizations, and then a broader-based organizational AI, which is exactly what we are hitting on is how does it change the fundamental processes in which we actually get outcomes in the organization. But where we are today is that we've spent the last several months at Microsoft really understanding where users and companies are. We have the Work Trend Index, which is our survey that goes up to 31,000 people across 31 countries. And what we found was that 70% said they were more productive with Microsoft Copilot, and 68% said Copilot improved the quality of their work. So it's just not the productivity, but it's actually the enhancement of the quality.

Duncan

And we think that really, on a personal level, has occurred because it's alleviating some of the challenges that we have in our work lives today. It's 64% spent less time processing email, which is a real challenge; 71% saved time on mundane tasks, and ultimately, 75% spent less time searching for information in those files. We were at a point in which we almost have this digital debt. Generative AI breaks through that noise that we have in our daily work cycles, finding the information that we need, getting to the answers, creating and refining the work that we're doing, and even in meetings. So you can imagine how that transforms us into more productive and, frankly, satisfied workers. But the real opportunity, going back to the points made, is not just in personal productivity, but to lift the capabilities of the entire organization. That's where we're seeing, really, organizations start to move forward now.

Streeter

Do you think that there is a lack of understanding about the tools available to leverage the power of AI and breakthrough that digital debt you've just been talking about?

Duncan

Yes. Back to a point that Catalina made earlier. This is not just another tool. This is a new technology powered by the force around natural language. I mean, the ability for anyone to use their natural way of communicating to get the answers and the reasoning engine that falls behind. Those organizations that think of AI as just a tool will fall short because it's really a new way of working, and it's going to take a mind shift and it's going to take the creation of new work habits. I tell our customers to think about Copilot like a chief of staff. You need to provide context on what you need, and it just doesn't end with one single brief prompt. You need to have a conversation, going back and forth, diving in deeper, and getting to the real outcome that you're looking for. You can imagine how this true enhancement is going to democratize everyone because this can be an intelligent assistant for everyone in every department across the entire organization, lifting everyone up. I do think there truly needs to be a better understanding of that potential and how it's going to reimagine and reinvent the way we're going to run our businesses.

Streeter

So Daren, Matthew there is talking about our future working habits and the new chief of staff arriving next to us to copilot with us every single day. But what about current working habits? I mean, what does EY research say about the time that the typical tax team spends gathering and manipulating data, which could be better spent on more strategic activities?

Campbell

There's increasing pressure for the tax function to spend time on more value-add activities. To your question, the surveys that we've done suggest that tax functions spend up to 70% of their time dealing with data. It's gathering it, it's transforming it, it's analyzing it, trying to work through that data. When we survey some of those same companies and say, What type of shift of your time would you like to see in more value-add strategic activities? The initial shift is about 10%. They want to reduce the non-value add activities by about 10% and increase the strategic time and focus by the same amount on the other side. When we look at just the nature of the activities and the types of activities that tax performs, today, the split is about 72% of the time spent on one of those routine compliance-type activities, with only 20% on the high-value activities. And that 72% takes a lot of time. So, as we talk with companies, one of the challenges that they're struggling with is the amount of time that it takes to prepare returns and go through the other compliance activities. It is so time-consuming that it does feel a little bit daunting to them about, Well, how do I upskill?

Campbell

How do I find time to shift and think more strategically? As Matthew talked about, that's one of the beautiful things that we're seeing about this technology is they don't need to learn a programming language. This is skills that they've been using to interact and work with their staff and coworkers all along. Just now they were able to interact with this new technology using those same skills.

Streeter

Catalina, given the challenges that Daren has outlined there, it is clear that many of us would really enjoy having a wingman or wingwoman to help us in our day-to-day tasks. What examples are there of teams who are already making significant progress in exploiting this technology?

Garcia Cure

Sure. There's too many lenses through which we can understand really the potential of generative AI for techs and provide some examples. I would use the categories that Matthew referred to a moment ago, which are personal and foundational AI. The first one, you said it, this personal assistant. We're talking here about personal AI. As a personal productivity assistant, I think, in general, I'm maintaining the talent of our people in the form of a bot or a layer that's embedded in the technology we already use. But think about a tax agent that also has access to general knowledge that's always there to help you research, retrieve, analyze, draft, and translate faster and with better outcomes. My point regarding your examples here is that every single task can be a great example. That is huge. Everything that our tax professionals and the tax professionals at our clients' tax functions do can be augmented with AI. If you think about it, not only is it amazing in terms of what the tax function can do, but it is also a privilege that not every function or industry could have. We are knowledge workers, and this technology is really powerful for workers who are working in their day-to-day lives with rules, language, and data.

Garcia Cure

As a personal productivity tool, everything is an example. I would say that the second one, as Matthew said, is the foundational AI, Generative AI as an embedded agent to automate and open not people but processes. Ultimately, it is people, but more holistically, it is a complete process. What we're seeing at clients is a deep interest in integrating this technology within tax systems, going far beyond what we used to do before, which is simple rule-based automation. It's not only about doing things faster, doing things that took more time before. There's a lot of that, of course, savings in terms of time and funds, but also, it's doing things in a new way and in a way that we couldn't do before. Our teams are working on a few examples in which you can really grasp the full potential of the technology. You're seeing generative AI from multiple perspectives, serving as a tool that adapts to many, I would say, challenges of the tax function. For instance, building a tax AI agent that can continuously monitor tax regulation changes across jurisdictions. Another agent can interact with humans and notify them of those changes and perhaps even recommend the next best action based on that regulatory change.

Garcia Cure

You could even go a step further and have a separate agent automating and updating systems and processes to ensure real-time compliance. We're talking about a process here and really augmenting that process with the help of AI.

Streeter

A few innovations there that Catalina has outlined. Daren, what other developments are you seeing that have really captured your attention?

Campbell

Marna, I love the comment that you made about tax being the epicenter of data in an organization. That is true. Tax is one of the heaviest users of data in an organization. One of the biggest challenges that tax faces today is that we don't own or control the upstream systems. As Catalina was talking about in her examples about getting to real-time compliance and being able to understand and have agents that are monitoring some of the regulatory changes in more of a near-time, real-time, this is one of the opportunities and seeds of innovation that we see in the tax function. Tax, as we go through the data, we've often been very reactionary. We're looking backwards at transactions and data in the past, and then we're trying to determine and then the tax treatment of what happened in the past. The opportunity for value that I was talking about before is really getting to when we get more near-time, real-time information; that's when tax can really be strategic across the organization, not just related to compliance. There are a lot of things in tax where we're looking at the nature of the transaction. But again, typically, we're looking very downstream in the system.

Campbell

And that's because of the amount of time it takes to review and process all the records. One of the areas of innovation that we're seeing is in the accounts payable process. That initially upfront, when invoices initially come into an organization, on that invoice, there is transactional information that serves a variety of purposes downstream for tax. We have things like sales and use tax and VAT. We have fixed assets and how they're coded, also related to property taxes as well. With the use of AI, we're able to process and look at that information upstream in the accounts payable process to actually do some of that tagging and classification in more of a near-time, real-time area. That will enable or allow tax and the value of tax that it brings to be used in planning activities that today we're generally not able to look at. That's why we have a lot of work that's spent today looking at refunds and filing amended returns; we're catching things in the past. As we move that upstream in the system, we're able to get better information, we're able to keep more cash in the door for the company and to help them do a better job paying the appropriate tax for the major restrictions that they're operating in.

Streeter

Great. Thanks, Daren. Matthew, both Daren and Catalina have talked about how GenAI is changing the day in the life of professionals. It's clearthere will be productivity gains, but should we be looking a lot wider in terms of our AI calculations. Daren, there making that example of how you can delve back into the past to find efficiencies as well.

Duncan

Absolutely. Back to what Daren just pointed out, it really is AI is becoming interwoven into every aspect of the firm, but it's reinventing the core business process where we're going to see the massive gains, the massive value created. Let's take other examples like global contract management. I know inside Microsoft, with 300,000 plus employees, there are so many people that touch the contract process. That puts a large load on our centralized legal organization to really make that all happen. You can now put the power out to the people through utilizing technology, something we're calling Copilot Studio, that allows you to create low code capabilities that land on the desktop of every employee who deals with contracts. You can search, verify, and do a lot of the steps that have traditionally needed to be managed by a centralized organization and put that in the power of those across the organization, creating massive efficiencies at scale. These are the types of breakthroughs that we're seeing. It goes beyond just the individual productivity. It's really around those processes. I think the power of giving those processes or access or an action step to individuals so that they can be more self-served and be more active in getting what they need to get their job done.

Duncan

This is going to be transformative.

Streeter

Marna, what other business processes could end up disappearing altogether because of GenAI?

Ricker

I don't think it's about what disappears altogether. It's exactly how Matthew and Daren framed it. It is far more about lifting up the human so that technology leads the process and the human applies the judgment. What I'm most excited about is that complete reshaping of what the human gets to do. What we get to do will get completely reshaped. That's what I'm most excited about. I don't think it's about what goes away. It's really about what we get to do. I don't think there's anybody who enjoys really, really manual, mundane things over and over again. I think that's what's exciting about it for me.

Streeter

But, Matthew, will this eliminate headcount then? I mean, those mundane tasks are currently carried out by people in jobs.

Duncan

Well, Marna hit the point exactly. It's going to actually reshape organizations. We see a more dynamic, more global organization where it's going to take and find efficiencies in one part and then redeploy talent in new ways to benefit business in other parts. Sure, there might be reductions in one area and additions in another. We see that in every technology inflection point. But we really see a reshaping happening, and that gets us really excited.

Streeter

So, the great reshaping of organizations is underway. Clearly, as you say, Matthew, there is plenty to get excited about. In the second part of the podcast, we're going to focus on some of the challenges that GenAI could help solve. For now, Matthew, Marna, Catalina, and Daren, many thanks. And can I just remind you that the views of third parties set out in this podcast are not necessarily the views of the global EY organization nor its member firms. Moreover, they should be seen in the context of the time in which they were made. I'm Streeter. I hope you'll join me for the next part of the Tax and Law in Focus podcast, focusing on how GenAI has the potential to revolutionize the world of tax. EY, Building a better working world.

Episode 17 - Part 2

Susannah Streeter

Hello, and welcome back to the Tax and Law in Focus podcast. We're focusing on how GenAI has the potential to revolutionize the world of tax. In part one of this episode, we heard about the transformative potential that this technology has to reinvent core business processes and reshape organizations. We're going to delve a bit deeper now into the other challenges facing the tax function where GenAI could be a game changer. I'm delighted to have four subject matter experts with me who really have superb insight into this subject: Marna EY Global Vice Chair, Tax, who's in Minneapolis in the US. Garcia Cure, who is EY Global AI Tax Leader, is based in Colombia. Also, welcome Duncan, Head of Thought Leadership on the Future of Work from Microsoft, who's in Seattle, Washington. And also, welcome to Campbell, EY Americas Tax Technology and Transformation Leader, who's in Washington, DC. But before we get back to our chat, please remember, conversations during this podcast should not be relied on as accounting, legal investment, nor other professional advice. Listeners must, of course, consult their own advisors. So let me resume with you, Catalina. Let's look at challenges where AI could be a game changer.

Streeter

How do you think it's set to make tax compliance easier? For example, what impact could there be on the number of disputes there are?

Catalina Garcia Cure

There's no question at all that compliance can be streamlined with generative AI. Compliance is all about good data management and managing rules and nuances in the form of language, and generative AI is great at these things. That was not the case for classical AI, but now we can really see a world in which generative AI can help us with regulatory updates, integration, as we discussed a moment ago, data accuracy and validation, anomaly detection in financial data, maintaining audit trails to be ready for disputes, preparing, filing and documentation. I would say that, in general, a shift in productivity in terms of reducing speed and complexity. But I'm particularly excited in terms of what this means in terms of risk management from the tax perspective and providing services to our clients in a way that perhaps we couldn't do before. We didn't have the power that generative AI gives us or the access to information in real-time and the ability to take the data, massive amounts, and apply rules in such a way that humans cannot actually do. So, real-time analytics are used for scenario analysis and predictive modeling for tax compliance in complex tax scenarios. We can become better advisors to our clients, and our clients can become better at managing their tax risk.

Garcia Cure

Now, to your point on the number of disputes, I think this is a fascinating topic. While generative AI can significantly aid in compliance, we cannot assume it will reduce the number of disputes. Let's not forget that for tax, historically, it has been the tax authorities the ones leading transformation and digital innovation, driving compliance based on real-time data. Electronic invoicing is a great example. They have the right incentives to do so. I would say it's the one sector of the government in which it's the opposite. Normally, it's been driven by the private sector, but here is the other way around. Tax authorities have been great adopters of AI. Generative AI is not going to be the exception. With Generative AI, if you think about it, tax agencies will have enhanced capabilities to scrutinize filing transactions more closely, which could lead to the identification of more issues of investigation. Tax authorities are also always solving for that, I would say, the difference between the number of taxpayers and transactions and the number of public servants working at the tax agency. This technology, really, because it's so crazy, the number of everything it has to monitor and examine. This technology really can, in a way, multiply the work and the number of things that a tax agency can monitor.

Garcia Cure

Reporting requirements could also increase with this increase as well in the power of the authority to be able to handle process and analyze more information in real-time. Compliance, yes, will perhaps become more accurate from the taxpayers' perspective. I think the threshold of what constitutes compliance would also be raised. I would say another very powerful reason for the heads of tax of the world to start their generative AI journey if they haven't done so.

Streeter

Okay, so, Daren, it's not going to be completely clear-cut when it comes to disputes, but do you see potential when it comes to an improvement in forecasting?

Campbell

Forecasting is the area that tax has traditionally not been very good at. When tax is doing forecasting today, generally, it's at a very high level. That is because the information that's needed to do more detailed forecasting takes a long time to generate. Typically, tax looks at higher-level information as it does its forecast. There is a lot of opportunity. As we look at finance, the sister to tax, we have seen AI and other advanced technologies being used in financial forecasting. The potential in tax is there. We're seeing it proven out in the financial forecasting that's happening. There are a lot of areas in tax where forecasting can be used. We can use forecasting around regulatory changes. Catalina talked about using agents to capture some of those changes a little bit earlier. We can use it, as she was just talking about, in the controversy space to help pre-identify risks of controversy. We can also use it in bringing value to the broader business, in forecasting the tax implications of organizational changes, mergers and acquisitions or operational changes, some of the changes to supply chain where goods are sourced from or sold to, and what jurisdictions different businesses are operated in.

Campbell

Those are all forecasts that we'll be able to do as we're able to move tax more to near-time or real-time reporting. It makes it that much more powerful. As we talked about previously, some of the challenges tax faces today just with the volume of data tax is dealing with and with the challenges in doing a lot of the mundane tasks, the amount of time spent in just trying to do the compliance side of tax takes a lot of time. I met with a VP of Tax not too long ago who made a comment to me that, Daren, I'm just trying to get my returns out the door. I would love to do a lot of this analysis and analytics and look for additional value, but we're just moving right up to the deadline of when we need to get some of the reporting done. As we've talked about, AI can help transform and free up some of that extra time to be more analytical to bring more of that value. We move tax upstream in the system so that we have the tax data on a more than near-time, real-time basis, and that's going to allow us to do a lot more tax forecasting than we do today.

Streeter

Daren, thank you. Marna, a little earlier, we talked about the changes in eliminating mundane tasks. Let's focus now on the demographic challenge. How do you think the use of GenAI will actually help with the recruitment and retention of tax professionals and ease the race for talent, particularly as it's so crucial right now given aging workforces?

Ricker

Thank goodness for the arrival of GenAI. One of the challenges certainly we've had in the tax profession is making sure we have enough. We are not just obviously public accounting, but overall, the VPs of taxes are really, really focused on the talent shortage. We've been looking for an answer to that question, and thank goodness, GenAI has come to our aid. Truly, probably for the first time in my almost 30 years of practicing tax, I feel optimistic about our ability to solve the resource challenge, and GenAI is the answer by all means. And so it creates this capacity for us to really get after and amplify, as I was talking about the technical expertise and solve for these challenges that you've been hearing. Just to give you some stats on some of the things Catalina and Daren were saying, there are 220 million laws on the books in 99,000 jurisdictions around the world. I'm giving you a sense of the complexity of what our VPs of taxes are dealing with out there and what companies are dealing with out there with a desire to make sure they get all of that right and advise their C-suite accordingly on really big capital and business decisions that impact their products and what they're trying to get accomplished.

Ricker

These are big things. These are really big things. And so think about the ability of GenAI to make sure it gets all of this done and it has that computing and processing power. And then one of the things we're really excited about, and so think about our children are growing up with this, and we'll talk about, hopefully, making GenAI really personal at home, too. But this is where recruiting and attracting talent to the profession that lives in this world already, that loves this technology and wants to come to organizations that, frankly, this is a standard. These are table stakes, and they're used to this. They speak conversationally to AI every single day. It's in school, it's organizations, and they're very comfortable with it. I'm thrilled about it. I think it solves our talent shortage, quite frankly, and I'm really excited about what that will ultimately do to the profession.

Streeter

Matthew, what would you say is the sweet spot in using the technology?

Duncan

Adoption is definitely something we are learning about every day and trying to be students of understanding where this technology really sticks. In our latest research, we found this tipping point for unlocking copilot value, what we call 11 by 11, which is about 11 minutes of daily savings when users perceive value in their work. Great things start to happen with Copilot when users hit that 11-week mark. It truly starts to become a habit. This is all centered around four key outcomes. They really start to feel greater productivity and a reduction in meeting loads. It also comes along with work enjoyment and more work-life balance. We definitely see this adoption curve starting to take shape.

Streeter

So, Marna, we can see that there are benefits, but still, there must be a big trust leap for so many people, particularly those who aren't digital natives.

Ricker

Look, I agree with Matthew. I think the first time you try, you fall in love. You never want to go back. That's certainly been my experience and our experience. And we saw that in our data. So Matthew gave some really compelling statistics early on regarding the work that Microsoft has done. That has been our exact work as we went through our pilot and the 365 Copilot suite. We had 92% of our people who went through it say: I don't want to live without it. That was exactly the same compelling data we had. So, in my mind, it's more of a matter of getting people to do the first try, and they find it easy. I loved when we were talking about your chief of staff. It's just having a conversation. With that precision in the conversation, you get the highest and best opportunity out of it.

Streeter

Matthew, how could these enhance work tools or general new way of working, as we've been discussing here, how could it really help with increased accessibility for neurodiverse people who in the past, felt a bit marginalized from the workforce?

Duncan

This is one of the other exceptional powers of artificial intelligence, and it's going to play great value in societal challenges that we've faced. Artificial intelligence plays a crucial role in promoting social inclusion and addressing the needs of individuals with cognitive diversity and other disabilities. You might see this come to bear in a couple of ways, such as accommodations and learning experiences where the tools can adapt to individuals' needs. It really allows neurodivergent individuals to have personalized learning experiences that optimize techniques suited to their learning styles. It could also help provide accessible workplaces and hiring practices such as emotional and conversational AI, assistive robotics, or social companions that create a more inclusive workspace. Ultimately, it assists your diverse individuals in identifying skills to grow and prepares them for really having important work conversations and being part of the fabric at work. So we're very excited about how it might help that community.

Streeter

Daren, what's your take on this, perhaps on a personal level?

Campbell

This is what affects me personally. One of my sons is very dyslexic. He's brilliant, he's very creative, he's very analytical. But a lot of knowledge in our world today is captured in written form, and that's a huge barrier to him. With generative AI, he's able to access that knowledge. He's able to get summaries of that information. He's able to use Generative AI to help explain that information in a way that resonates with them. Then, as he's creating content, much in the same way as he's writing, that would take him a lot longer than others. So, trying to get those great ideas out where he can communicate with others has been a challenge. Generative AI is a new tool for him, something that's beginning to help him communicate his ideas in written form. So, the written knowledge is either captured or generated. It's giving him access to that part of the world that was much harder for him to work with in the past.

Streeter

Giving him so many more opportunities. Marna, what's your view on this?

Ricker

Daren and I share that. I have a dyslexic son also, and he had to learn to read. In order to learn, you have to know how to, and then you read to learn. That's really, really challenging for dyslexic kids. We're seeing the exact same thing. I had to go to school and read his tests to him. I no longer have to do that because of the power of Generative AI. We're just seeing amazing leaps. Dyslexic kids tend to have very high IQs, but they struggle because of this reading barrier. It's really unlocking amazing things for him in the exact same way. It's that written piece and that reading piece. It's unlocking the ability to listen as opposed to having to write and read to really unlock his potential and his IQ.

Streeter

Catalina, what's your view? What other benefits do you see for the employee experience and potential employees, as well as the challenge of attracting talent?

Garcia Cure

I do think that employee experience meant something very different before the advent of generative AI. That's because this technology really has the opposite patterns of other technologies in terms of the type of work that can be automated with the technology. Another way to say this is that it really diverges from the patterns of traditional automation technologies like classical AI, which primarily augmented or replaced often the work of physical workers. So, manual and repetitive physical work was largely impacted. But for us, knowledge workers or fields of play with that technology were quite limited. I actually love how Satya Nadella used the term symbiosis when he presented Copilot to the world as a way to explain the history of working with machines to the point in which we now can use our own language, not code, not code, our own words in Spanish, English, Portuguese, whatever language you speak, to work with the machine. We can delegate in real time. As I said before, everything that a tax professional does can be augmented by generative AI, and it's beyond productivity. We always get cut up in the productivity benefits. But if you think about it from the experience, it is beyond productivity.

Garcia Cure

For instance, creativity and innovation enhancement, I think that is huge. Use generative AI to really get going with something you have to do. It can be quite technical, even from the tax perspective. Personalized learning and development: we just heard a bunch of interesting perspectives on this topic. Generative AI is a great mentor from multiple points of view. I think that really teaching our people to use Generative AI as a guide to learning technical and other questions that we face as professionals is quite important. For tax, reducing repetition, not only from the productivity perspective, once again, but also from the experience and satisfaction perspective, being able to delegate that part and act as an agent that it's more like supervising the machine instead of doing that repetitive work that perhaps doesn't add a lot of meaning to workers. I would say, for instance, onboarding from the perspective of having your newest talent be brought up to speed and level up a little bit in comparison to the rest of the tax function professionals. That's something that is huge. In terms of, once again, not only productivity but also the experience of that person to feel that they can quickly be part of it and have access to all the knowledge, all the information in real-time.

Garcia Cure

On our EY Work Reimagined survey of last year, we found that just 49% of employees expect to use the technology in the next year, but the number jumps to 59% of tax and finance employees. I think that is really because it has multiple angles, like the amount of information and the fact that it can reduce repetition and has that potential. There are benefits there. The last thing is, to your point of not attracting talent, and to Marna's point, this will be standard, I agree, like having a laptop. Are you going to tell your people that you will not provide something that's as essential and life-changing from the employee's experience perspective as a laptop? What happens if you tell them you cannot have it? I think it is a real game changer for talent attraction as well.

Streeter

Let's look at the professional services. Do you think there will be new opportunities emerging in this realm as well, thanks to new ways of working?

Duncan

As pointed out before, AI will unburden professionals from the mundane and truly allow them to amplify their expertise and take what is really good today to become exceptional. That just opens up new value-creation opportunities. Ultimately, how it creates new streams of innovation and revenue generation.

Streeter

Marna, what's your forecast here? What does this all mean for current models of business overall? Will we have to rip up models and start again?

Ricker

There are two big things that will happen over time: there's an evolution in the value stream. Productivity will go up significantly. User experience will go up significantly. Speed to value is going to rocket. That risk reduction is nearly coming into play because, again, the ability to generate AI insights is going up. Accuracy is going up. Satisfaction is going up. There will be value placed on each of those things. There will be human experience and satisfaction placed on each of those things. What dollars we place on those as organizations is yet to be defined. Because it is early days, we're talking about just a little bit over a year. Matthew, I think, just maybe 15 months into it. Really? 15 months? We've had Generative AI for a long time. Haven't had this extraordinarily powerful generative AI for as long. I think we're yet to see, and that's why I don't want to place limits on it. I really want it to be limitless on what that will look like.

Streeter

Well, Marna, I just actually want all of you to sum up what you think will be the transformative power of AI and the tax function in the future. If you could just sum it up in a phrase, what would you think it would be?

Ricker

I think extraordinary, big, smart thinkers will be unleashed, and it won't just be in tax.

Streeter

Well, Daren, what's your take?

Campbell

I think this will be transformative to our profession that it's going to move tax from being an archaeologist or a historian to being a business strategist.

Streeter

Catalina?

Garcia Cure

I think the tax department will become the intelligence center of the organization and the custodian of the data of the company.

Streeter

And, Matthew.

Duncan

I'll just sum it up by saying the possibilities are limitless, and we need to start exploring now.

Streeter

No time like the present. Well, thank you so much for your time, all of you. It's been absolutely fascinating. I wish we had longer to discuss all of these themes. They're so important right now.

Ricker

Thanks for having me, Susannah. It's been great to be part of the podcast.

Duncan

Goodbye, and thanks for including me. It was really an engaging conversation.

Garcia Cure

Goodbye. Thank you for having me. It's been a great conversation.

Campbell

Thanks for having me on the podcast.

Streeter

A quick note from the legal team. The views of third parties set out in this podcast are not necessarily the views of the global EY organization nor its member firms. Moreover, they should be seen in the context of the time in which they were made. I'm Susannah Streeter. I hope you'll join me again for the next edition of the Tax and Law in Focus podcast, EY: Building a better working world.

This two-part episode of the Tax and Law in Focus podcast, hosted by Susannah Streeter, delves into the far-reaching effects of generative AI (GenAI) on the tax sector. To address this pressing topic, the podcast welcomes Marna Ricker, EY Global Vice Chair – Tax; Catalina Garcia Cure, EY Global Tax AI Leader; Daren Campbell, EY Americas Tax Technology and Transformation Leader; and Matthew Duncan, Head of Thought Leadership on the Future of Work, Microsoft. The conversation focuses on how GenAI is poised to revolutionize tax functions.

The discussion emphasizes GenAI’s role in enhancing efficiency by automating data-heavy tasks and its potential to transform compliance by increasing accuracy and reducing error rates. Notably, GenAI’s capability to process and analyze real-time data is highlighted as a game-changer, allowing tax professionals to shift from traditional compliance to a more strategic and advisory role within their organizations. The panelists explore various applications of GenAI, from improving day-to-day operations to reshaping strategic planning and forecasting in tax functions.

They also address the cultural shift needed to integrate GenAI successfully, including the necessity for ongoing training and adjustment in workplace dynamics. It discusses the practical steps tax leaders can take to harness its potential effectively, providing a roadmap for integrating artificial intelligence (AI) into tax practices for enhanced decision-making and strategic advantage.

Key takeaways:

Understand how GenAI will transform tax functions by automating routine tasks and enabling real-time strategic decision-making. Learn how AI can improve the accuracy of tax reporting and compliance, reducing the risk of errors and disputes.
Appreciate how GenAI facilitates a strategic approach to tax, turning data into actionable insights for business strategy.
Gain insight into how GenAI is reshaping tax professionals' roles and required skills, emphasizing analytical and strategic capabilities over routine data management.

Presenters

Susannah Streeter
International broadcaster and financial analyst

Podcast

Episode 17

Part 1 and 2

Duration

0h 54m 7s

Podcast

Episode 17

Part 1 and 2

Duration

0h 54m 7s

In this series

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

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How artificial intelligence will transform tax

Key takeaways:

In this series

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