By Russell Gammon, Chief Innovation Officer, Alphatax
Since ChatGPT burst onto the scene nearly four years ago, talks of AI and automation have dominated newsrooms, boardrooms and dining rooms alike.
However, 2022 certainly didn’t introduce the world to the power of automation. For tax professionals, Robotic Process Automation (RPA), which uses software to automate tasks typically performed by people, is a well-established technology, valued at over $27 billion annually.
For well over a decade, RPA has supported tax professionals in performing a number of repetitive computer-based activities, such as extracting information from systems and updating datasets.
RPA first captured the attention of the tax industry due to its advanced capabilities compared to the legacy macros that were available at the time. Now, RPA is the legacy technology, with the widespread adoption of AI-assisted software development and emerging agent-based tools creating new ways to automate both structured tasks and more complex workflows. For tax leaders in charge of automation strategies, the question is: Do RPA systems still hold up against this new technology?
The power of AI
AI tools are capable of a number of feats that are simply unavailable using RPA systems. In recent years, the technology has taken great strides and has evolved far beyond the simple generative capabilities that amazed the world four years ago. Progress has been extremely rapid. AI is already able to support a wide range of core tax functions, with routine processes and detailed analysis that previously took hours now being completed in minutes. AI is reshaping the role of the tax professional into one of reviewing and refining, requiring input at key points in a given process, rather than carrying out every single step.
The number of functions AI can perform is an ever-expanding list, including analysing trial balances and generating more tailored client queries. From the automation of in-depth research to tools that can identify, collate, and cross-reference information across a wide variety of sources, these capabilities help tax professionals quickly understand complex issues, such as regulatory changes or cross-border structuring.
It is important to remember that key AI outputs almost always need to be reviewed by a human. Although this does not detract from the significance of the underlying efficiency gains, AI simply cannot replace professional expertise. Instead these tools can reduce workloads, so experts spend more time being experts and significantly less on processes such as document formatting and version control.
Taking the next step
As AI technology advances, we are seeing further progress away from generative capabilities towards the rise of agentic AI. These are autonomous agents, which, instead of executing a rigid sequence of steps, are designed to achieve a defined outcome on their own. This marks an even bigger leap away from RPA capabilities. For example, RPA systems can be configured to translate information from a range of formats and source systems into a standardised output, and can even be built to deal with known edge cases or errors that users see in practice. However, as ever with data challenges, there are invariably issues that users can’t foresee when setting up processes.
In contrast, an autonomous AI-driven agent can instead interpret the goal and work out how to achieve it. This includes finding alternative options or ways to overcome obstacles, without pre-programming or requiring help, if the user chooses. This unlocks enormous potential, with agents able to make effective and meaningful progress towards task completion without burdening their human counterpart – rather than simply carrying out pre-programmed steps. The capabilities of AI agents, therefore, extend beyond simple tasks, as they are able to execute complex processes such as carrying out additional research or preparing responses for review.
This is pushing the need for human intervention further down the chain of expertise. This ensures tax professionals can spend more time using their knowledge and experience on more complex and nuanced challenges, where human insight is most valuable.
As workers grow more skilled in the use of AI systems, they will be able to generate additional prompts and automation workflows that enable agents to apply rules or carry out tasks across multiple entities. Tax professionals can now work alongside AI to implement complex automation quicker than ever, without requiring specialist knowledge.
Maintenance is also becoming easier, with automation logic able to be updated and re-tested quickly should requirements change. This means many tasks that previously required an RPA platform can now be handled through lightweight, custom-built AI automation tools or products.
Developments in AI technology are still ongoing, with innovation happening at an extremely rapid pace. As it continues to evolve, those making tax technology investment decisions need to consider their potential to transform legacy processes and workflows. It may be time to thank RPA for its service and welcome in a new era of AI-powered automation.