94% of CFOs and Tax leaders expect GenAI as a game changer for tax functions: EY Survey

• 60% of respondents believe that areas of impact are around tax accounting, data and compliance
• 47% of tax leaders are in the exploratory phase of GenAI adoption
• 59% of respondents plan to change their tax and finance operating model 

New Delhi, 26 November 2024 According to the EY Tax and Finance Operations (TFO) Survey 2024, 94% of CFOs and Finance & Tax leaders in India believe generative AI (GenAI) will significantly enhance the effectiveness of their tax functions—a remarkable increase from just 19% in 2023, highlighting a growing recognition of GenAI’s potential in the tax landscape. Globally, 87% of leaders echo this sentiment, underscoring GenAI's potential to revolutionize tax functions worldwide.

Based on insights from 1,600 leaders across 32 countries and 18 industries—including 70 CFOs and Tax leaders of leading Indian corporates—this global survey highlights key challenges in the tax and finance domain.

The EY TFO Survey 2024 highlights that Indian tax leaders have already begun to make strides in their GenAI journey, with 14% actively developing strategies, launching pilot projects, and exploring early-stage Gen AI applications. Another 47% are in the exploratory phase, investigating and experimenting with GenAI's potential to enhance their operations, surpassing the global average of 40%.

Reflecting on the findings, Rahul Patni, Digital Tax Leader, EY India believes that “GenAI is clearly emerging as an effective tool for tax professionals to transform their workspaces and professional lives; every tax professional should learn about Gen AI, start applying it in routine tasks. Areas of application can range from AI assisted document reviews to data cleansing and drafting business deliverables for day-to-day matters. This will allow them to work more effectively, focus on strategic priorities, and make better decisions.”

The survey further highlights that 44% of respondents cite lack of skilled talent and limited understanding of GenAI’s capabilities as major barriers. The survey also shows that 46% of respondents in India (and 45% globally) spend their time on routine tasks like data collection and tax return preparation, which Indian tax leaders believe should take no more than 20-25% of their time, allowing for a greater focus on strategic initiatives.

Data and Tech Transformation key to meeting regulatory pressures

As per the survey for the first time, cost pressures are the top concern, with inflation and cost-cutting eroding tax and finance budgets. Notably, 91% of Indian companies plan to reduce their tax and finance budgets. At the same time, the survey highlights that tax functions face an increasing urgency to manage more complex and data-heavy tax responsibilities. New reporting requirements like BEPS 2.0’s Pillar Two rules, are expected to have a significant bearing on the burden of tax and finance functions.

In this backdrop, and necessarily so, organizations are looking at alternate operating models, signalling a strategic shift in ways of running the tax and finance operations. Notably, 59% of Indian companies are planning to change their tax and finance operating models.

In the context of shift in ways of working, the survey highlights a trend of tax skills being complemented very well by data and technology skills. However, there is extreme talent pressure witnessed at the same time. 72% respondents from India believe that fewer accountants entering the profession and retirement of senior tax and accounting professionals would be a significant disadvantage for the tax and finance function over the next five years.

Jitesh Bansal, National Leader, Tax and Finance Operate, EY India said, “As regulatory and reporting burdens grow, tax and finance functions face increasing strain. Tax teams in companies will need to step out of their comfort zones and start addressing newer problems around tax function strategy, processes, data quality, audit readiness and so on. The need of the hour is for tax and finance functions to have access to expert tax knowledge, combined with a working knowledge of process, data and technology, whether inhouse or through external support. The chosen operating model should allow flexibility, modularity, talent management ability and best practises.”

For further global insights and detailed findings, please refer to the full survey report.

Notes to Editors

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