Tax leaders optimistic about transformative power of GenAI, EY finds

Some 87% of CFOs and tax leaders surveyed believe generative AI (GenAI) will drive efficiency and effectiveness, up from 15% a year ago, according to the latest EY Tax and Finance Operations (TFO) Survey.EY

The 2024 survey – which gathered insights from 1,600 CFOs and tax professionals across 32 jurisdictions and 18 industries – concludes tax and finance functions will need to transform to contend with growing cost pressures, a talent deficit, and compliance with new tax regulations.

Despite the positive feeling towards its effectiveness the survey found that only three in four (75%) said they are only in the early stages of their GenAI journey.

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.

Almost half (49%) of respondents said effectively managing budgets is their top priority and 86% are looking to cut costs.

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 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. Some 42% percent of organisations anticipate a considerable number of adjustments to source Pillar Two reporting data, and 82% expect to make moderate to significant changes to their reporting processes.

Meanwhile, the talent gap is now a critical challenge, with seven in ten (70%) tax and finance leaders feeling the impact of fewer accountants entering the profession while senior cohorts retire. More than half (53%) said they are struggling to retain and attract qualified people. The survey further reports that 62% believe that employees without a university degree are an increasingly important source of talent.

More than half of respondents (55%) said GenAI won’t 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.

Marna Ricker, EY Global vice chair – Tax, said: “GenAI is already revolutionising the tax and finance industry by helping manage complex reporting tasks and large amounts of data. It’s empowering tax professionals to have a transformative mindset, allowing them to be more efficient, focus on more strategic tasks and make better decisions.

“This will, in turn, unlock value for their organisations. While the survey indicates that many leaders are still grappling with how best to take advantage of the technology, now is the time to future-proof the tax function by developing a plan to integrate GenAI responsibly and with confidence.”