EVOLVING regulatory changes, a changing workforce, and emerging technologies are among the many challenges that companies are facing today.
Tax professionals, in particular, face immense pressure as they seek to manage tax and statutory compliance in the highly complex economic and regulatory environment.
Amid the more demanding climate, the savviest tax leaders have recognised the importance of transformation, said Ajay Kumar Sanganeria, partner and head of tax at KPMG in Singapore.
“While traditionally, tax functions have assessed technology with large scepticism, new technologies like artificial intelligence (AI) have created a buzz, bringing the transformation agenda top of mind,” he said.
Further fuelling this is a greater convergence of business and regulatory requirements, with a push from regulators to collect information in a real-time manner, rather than through ad-hoc submissions. Tax authorities are also leveraging data and technology to identify and engage companies that may be non-compliant.
“This means that companies are now expected to get the data right the first time, with little room for retrospective rectifications,” Sanganeria added.
What Singapore companies will need is a road map to drive effective data management for more efficient tax planning and reporting, with a broad range of technology solutions.
Indeed, tax leaders recognise the need to harness the latest technologies, while grooming the right balance of tax technical and technological expertise, KPMG’s Tax Reimagined 2023: Perspectives from the C-suite global survey showed.
The survey – which gathered insights from over 500 C-suite executives – found that more than half were already using AI technology in their tax or finance departments to improve workflows and reduce strain on existing talent.
Catherine Light, partner, Tax Reimagined at KPMG in Singapore, said interactions with clients showed a high level of interest in reimagining their tax processes by deploying the right technologies and AI to help achieve their objectives.
“As technologies advance, there will be a paradigm shift from what has been done traditionally towards the future state model enabled through increased levels of standardisation and automation,” she said.
“Hence, business leaders see the need to reassess the roles and skills requirements of their teams in tandem with technology developments.”
Sanganeria noted that KMPG’s Tax Reimagined framework combines technology, transformation, and compliance capabilities under a single umbrella to help organisations develop and implement a customised target operating model for their tax and finance functions in a holistic manner.
“This will enable them to reduce costs, mitigate risks, improve quality and more importantly, drive more strategic value across their organisations,” he said.
Use cases
The emergence of AI has dramatically changed the way people operate, and it is no different for tax professionals.
“Some of the common use cases include chatbots, which can be used to assist to answer simple tax-related questions and identify key risk areas or opportunities,” Sanganeria said. “However, there is a potential for its scope to be expanded further to ensure a more effective and holistic management of taxes.”
One example where such tools could be useful is in the implementation of Base Erosion and Profit Shifting or BEPS 2.0 initiatives, which require many multinational companies to re-examine their global tax obligations.
“This scale of change will be at unprecedented levels for tax departments everywhere. Complying with the rules will require companies to rethink and redesign how they think about process, technology, data and people,” said Sanganeria.
Such global developments may also mean that adopting technology-enabled solutions would become “more of a necessity than a luxury”, he added.
KPMG’s Digital Gateway for Tax platform allows businesses to leverage the cloud-based KPMG BEPS 2.0 Automation Technology tool to ensure alignment and integration with existing local country compliance reporting in view of the new Pillar Two obligations.
The cloud-based platform also offers the full suite of KPMG tax technologies across tax and financial reporting, strategic planning, compliance transformation, data and asset management.
Light also observed that the platform allows KPMG’s tax professionals to help clients transform tax functions to become data-driven and digitally enabled, while staying aligned to business goals.
“Organisations have direct access to KPMG’s extensive investments in machine learning, data analytics, powerful visualisations and AI technologies in one place, all driven by the rich data that they already have on hand,” she said.
The platform also combines the expertise of KPMG’s global network of professionals, its alliances and its technology solutions to form an integrated platform that has been built to support tax leaders and their evolving needs.
Monitoring risks
Even as new technologies become a necessity for tax professionals, it is also important to consider any potential pitfalls or risks – such as those related to privacy, confidentiality and ethics.
Sanganeria noted that a lot of data and information may need to be ingested into technology – including AI platforms – and used to train or build logic to be able to generate useful results.
“It is crucial to ensure that these are taking place in a private and secure environment, where there is no risk of the queries or outputs being leaked to the public domain, even when the technology or AI functionality eventually becomes available to users,” he said.
Testing is also another critical element in the implementation of AI to ensure that errors are identified and the solution is critically evaluated.
He said: “Ultimately, technologies, including AI, should be used to augment human capabilities, rather than entirely replace it, as this will also ensure that it continues to be used in a responsible and ethical way with true benefits for businesses.”
