Technology: the path to tax efficiency and innovation 

By Russell Gammon, Chief Solutions Officer at Tax Systems 

Technology has long been the catalyst for change across many industries, and tax is certainly no different. As an industry that relies heavily on manual processes and huge amounts of data from a variety of sources, there is an opportunity for technology to make a real difference both on an operational and strategic level. 

In addition, there are a lot of forces reshaping the tax environment at the moment: legislative and regulatory changes, such as Pillar Two, are coming in to add further reporting and compliance challenges; Gen-Z are entering the workforce, demanding a different way of working; and HMRC’s upcoming “digital roadmap” will bring additional transformation. Adapting to these changes will undoubtedly be difficult for tax professionals, but embracing technology is key to overcoming this challenge, moving forwards and staying ahead of competitors.

Now is the time to prepare. With so much change in the pipeline, waiting and reacting as it happens will leave organisations on the back foot. Given many of the factors, such as new legislation, are external, tax departments should focus on what they can control – people, processes and technology – and act accordingly. Those that establish these strong foundations now will put themselves in good stead to adapt to whatever comes their way next.  

Moving past the digital dread 

The challenge is that the tax industry is traditionally cautious, and in some cases reluctant, when it comes to embracing new technologies, which is what these new factors demand. In fact, it could be argued that this provides the ideal opportunity for the tax industry to overhaul itself and revolutionise its capabilities. For that to happen, leaders must set the agenda, embrace technology and secure the buy-in of employees at every level. Flexible business models with next generation technology built-in will open new doors quickly. 

The most obvious case in point is AI, which is already commercially available and can transform how any business operates. At the simplest level, it can automate many of the mundane tasks that usually take up so much of a tax professional’s time. As you teach it more, it can make more informed decisions regarding expenses, for example, where it can verify their authenticity and collate them into categories, thus eliminating a tedious, yet necessary task. 

With validated data in place, AI can go on to create reports, identify trends and ultimately optimise a company’s tax position. And you don’t need technology specialists to learn or operate most AI platforms; it’s all a question of asking the right prompt and authenticating the responses accordingly. 

Strong and agile tax teams 

Integrating new technology, such as AI, into tax teams will enhance efficiency and productivity, while also making the profession more attractive, particularly to talented and ambitious Gen-Z graduates. This cohort does not welcome the repetitive manual grind associated with entry level roles so using AI to eliminate them makes it more attractive all round. Learning through checking AI output is much less tedious than crunching the figures in person. 

AI will also transform job roles across the tax sector, providing new opportunities for veterans and newcomers alike. Thus, we shall see the evolution of the tax professional into data analyst, planner and AI interpreter, among others, where more creative, productive and strategic projects come to fruition. The end result is insight-driven counsel and problem-solving services for clients with a focus on data quality and governance. 

This variety provides the foundation for a strong, yet agile, tax team that blends the robust traditions of the trade with the new technology that is shaping the future: a team of tax professionals with the flexibility and endurance to take on anything. 

Weathering the Pillar Two storm 

There are several specific incoming changes that must be addressed sooner rather than later. Pillar Two’s aim is to establish a level of corporate tax parity across countries. Being, effectively, a new tax; this means reporting and compliance challenges, such as gathering vast amounts of data to meet the requirements. This data is distributed across multiple applications, databases and spreadsheets so retrieving it won’t be straightforward. 

Again, technology can come to the rescue as Pillar Two specific solutions have been flourishing recently. Dedicated software can now automate workflows and calculations, directly mapping input from systems, spreadsheets and elsewhere. This centralised repository can pull data from ERP, accounting, HR and payroll to provide a comprehensive, enterprise-wide single source of truth. 

This type of centralised platform also enables non-technical users, including senior tax management and business leaders, to quickly extract insights, generate meaningful reports, and uncover hidden risks at the touch of a button. Such an elevated level of detail will enhance strategic decision-making and tax planning.  

Digitalising to endure the path ahead 

The maturation of certain technologies, combined with upcoming compliance responsibilities, will drive innovation and improve efficiency. Companies that are willing and able to embrace those factors they can control, including people, processes and technology, will continue to grow and thrive no matter what external forces dictate. For organisations that want to best prepare for 2025, build a responsive, reliable workforce and face the future with confidence. Now is the time to build the necessary digital backbone that will underpin our future development and ensure the survival of the fittest in the years to come.

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