CFOs and tax leaders optimistic about transformative power of GenAI amid rising cost and regulatory challenges, survey finds

• Eighty-two percent (global 87%) of Southeast Asia’s (SEA) CFOs and tax leaders surveyed believe generative AI (GenAI) will drive efficiency and effectiveness, up from 14% (global 15%) a year ago
• Cost pressures identified as the biggest challenge for the first time in survey history
• The struggle to retain and deploy tax and finance talent is peaking

The latest EY Tax and Finance Operations (TFO) Survey finds generative AI (GenAI) will help transform tax and finance functions, helping to address inefficiencies, talent shortages and compliance with emerging reporting obligations, including those related to global minimum taxes. However, while over three-quarters of chief financial officers (CFOs) and tax leaders (SEA 82%, global 87%) say GenAI will drive increased efficiency and effectiveness, up from 14% in 2023 (global 15%), the majority (SEA 92%, global 75%) say they are only in the early stages of their GenAI journey.

The 2024 survey – which gathered insights from CFOs and tax professionals across 32 jurisdictions and 18 industries, including 66 in SEA covering Indonesia, Malaysia and Singapore – concludes tax and finance functions will need to transform to contend with growing cost pressures, a talent deficit and compliance with new tax regulations.

Elaine Yeo, EY Asean Tax and Finance Operate Leader, says:
“Technology, including GenAI, is revolutionizing the tax and finance function by helping to manage complex reporting tasks and large amounts of data. It helps to empower tax professionals to adopt a transformative mindset, allowing them to be more efficient, focus on more strategic tasks, and make better and quicker decisions. This will help them unlock value for their organizations.

For tax and finance professionals in SEA, they need to consider future-proofing the tax function by developing a plan to deploy GenAI responsibly and with confidence. This plan should consider allocating financial resources efficiently to the tax function. Effective change management strategies should be implemented to guide the embedding of technology into tax processes. By doing so, organizations in SEA can strive to stay ahead of the curve, and be well-positioned to navigate in the modern and complex world of digital tax administration.”

Cost is now the biggest barrier to achieving vision and purpose

For the first time in the six-year history of the survey, cost pressures emerge as the top concern for respondents, with cumulative cost-cutting and inflation significantly eroding tax and finance functions’ budgets in real terms. Four out of 10 (41%) SEA respondents (global 49%) say effectively managing budgets is their top priority and 80% (global 86%) are looking to cut costs.

Regulatory and reporting pressures drive need for data and tech transformation

The survey further highlights that tax functions face an increasing urgency to manage more complex and data-heavy tax responsibilities. This includes real-time digital tax filings and e-invoicing that is soon to be required in nearly 100 countries. These obligations also include complying with the adoption of recommendations by the OECD, such as Pillar Two of the base erosion and profit shifting project (BEPS 2.0), which urges countries to set global minimum tax of at least 15% for large corporations.

In SEA, 38% of organizations (global 42%) anticipate a considerable number of adjustments to source Pillar Two reporting data, and 83% (global 82%) expect to make moderate to significant changes to their reporting processes.

Yeo says:
“Mounting regulatory and reporting pressures, including the complexities of BEPS, continue to strain tax and finance functions. Many businesses are still grappling with data availability, quality and reconciliation to support compliance and strategic decision-making. Leveraging data reuse and intelligent agents is a powerful solution to help address these challenges, allows tax and finance functions to work more effectively and focus on growth and innovation.”

Talent pressures on tax and finance functions approach crisis levels

The talent gap is now a critical challenge, as 77% of tax and finance leaders in SEA (global 70%) feel the impact of fewer accountants entering the profession while senior cohorts retire. More than half (SEA 55%, global 53%) say they are struggling to retain and attract qualified people. The survey further reports that 64% of SEA respondents (global 62%) believe that employees without a university degree are an increasingly important source of talent.

More than half of respondents (SEA 56%, global 55%) say GenAI will not lead to a reduction in the tax function workforce. Instead, companies will reallocate their tax and finance employees’ time to more strategic, high-value activities and away from routine compliance tasks.

Yeo says:
“The talent gap has reached crisis proportions. Employees are being called on to do more with less, but businesses also want tax professionals to spend twice as much time on strategic tasks than they do on routine work. To facilitate this, many businesses are looking to co-sourcing as a solution, particularly with the budget constraints and the need to invest in technology and GenAI.”

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About the survey

The 2024 EY Tax and Finance Operations Survey was conducted by Oxford Economics from June to July 2024.

The study queried 1,600 executives across 32 jurisdictions and 18 industries, to understand how tax and finance functions are being affected by change.