AI is driving the tax function of the future: proceed with care

Artificial Intelligence (AI) and machine learning are beginning to bring new possibilities for our lives, our businesses – and our taxes. Already, AI applications have the ability to sense, think and act in ways that out-perform humans. AI and machine learning can also provide the tax function of the future with the platform it needs to be more nimble and accurate in delivering what enterprises need, exactly when it’s needed.

These developments, however, also bring risks, as we discuss in the latest Spotlight in PwC’s Tax Function of the Future series – How tax is leveraging AI – and machine learning – in 2019. So it’s not surprising to see that businesses are cautious about the impact of AI: PwC’s latest Global CEO Survey found 84% of CEOs say that AI-based decisions need to be explainable if they are to be trusted.

Responsible AI has to be much more than a buzzword because AI and machine learning are here to stay. ‘Small’ automation has already transformed the tax function’s ability to gather, analyze and present information. And AI has the power to do so much more: for example, it allows detailed, accurate data from new sources to drive more in-depth questions, answers and analyses that would previously be difficult, time-consuming or even impossible to accomplish. It can also perform the structured or unstructured tasks carried out by humans at a much quicker rate – and far more accurately.

AI can also be used, to extract data from written text, audio and speech. Its ability to recognize patterns in scanned documents means it can be used to digitize tax forms, notes and contracts. Machine learning goes still further by identifying patterns in data that can be used to form predictive models for planning and forecasting, or determine tax implications of transactions.

The Spotlight on AI uses real-life examples to illustrate how technology is already being used, such as a ‘taxbot’ that understands natural language and uses curated knowledge databases to formulate responses to tax questions.

Given the skepticism displayed by CEOs and the risks involved, however, PwC advocates the use of a responsible AI framework that acts as a roadmap to highlight what protocols businesses need to have in place to ensure the safe deployment of AI solutions: an AI initiative:

• Strategy – business and tax strategies are aligned so initiatives don’t operate in isolation
• Design – there is full transparency around models and calculations
• Develop – rigorous program management is in place, with careful testing and training of staff 
• Operate – seeking out and eliminating unintentional bias, monitoring the quality of data, protecting against malicious attacks.

While we can accomplish astonishing things with technology in our daily lives and work, it’s essential to proceed carefully. As this Spotlight explains, becoming a leader in AI – and bringing AI to life in the tax function – requires a well-thought out approach that covers every stage, from a structure that delivers momentum and ROI, to the workforce, data, and the issue of trust. You can read more about the future of AI on PwC’s AI predictions pages and explore the newly released Responsible AI Toolkit here.