Transforming the Tax Department with Generative AI
Newsletter in partnership with Marcos N. .
Generative artificial intelligence is rapidly becoming a transformative tool for corporate tax departments. In a landscape where time is a valuable resource, this technology offers a promising solution: drastically reducing the time spent on tax compliance, freeing up professionals to focus on more strategic activities.
Studies indicate that companies plan to invest an average of $3.6 million in technology over the next three years to modernize their tax operations. This movement is partly driven by the volume of repetitive work, which consumes more than 1,500 annual hours on tasks related to tax compliance. In Brazil, this demand translates to an annual cost of R$67 billion, according to a survey by the Movimento Brasil Competitivo (MBC) "Competitive Brazil Movement with data from EY and Endeavor.
The expectation is that with tax reform, this time could be reduced by 600 hours, generating significant savings of R$28.1 billion. However, generative AI has the potential to go further, reducing even more the time required to fulfill numerous primary and ancillary tax obligations, regardless of the company's industry.
More than Efficiency: Strategy and Innovation in the Tax Department
With the automation of repetitive tasks, tax professionals will have more time to focus on activities that truly add value to the business. For example, tax data analysis could be used to identify opportunities for savings and innovation, positioning the tax department as a key player in generating strategic insights.
Innovation exists to transform a value proposition in two ways: by reducing the costs and efforts associated with a task, or by creating new opportunities for value capture. Generative AI can achieve this by processing large volumes of data, creating complex and detailed analyses with agility.
A practical example of this potential is the application of generative AI in filling out forms to obtain tax incentives, such as those provided by the Lei do Bem (11.196/2005), which encourages research and development of technological innovation in Brazil. AI can be trained to understand government requirements, facilitating the process and allowing analysts to focus on more strategic aspects of their work.
A New Era for Tax Data Analysis
The next step in the evolution of using generative AI is integration with the Public Digital Bookkeeping System (SPED). This integration will allow companies to intelligently analyze tax data related to ICMS and IPI, providing valuable insights for cost and operations optimization.
By analyzing SPED data, companies can, for example, identify the lowest-cost supplier instead of just considering the lowest price. Additionally, AI can highlight operations where the company did not claim tax credits, something that could be overlooked amidst the large volume of invoices.
These insights can influence strategic decisions, such as the location of factories and distribution centers, the redesign of the logistics network, and even brand repositioning. AI, combined with the tax department, enables the simulation of different scenarios and the analysis of which is the most financially favorable for the company.
Opportunities Ahead
The perception of AI's positive impact on increasing business productivity is shared by CEOs worldwide. Generative AI amplifies these opportunities, making it possible to carry out complex tax compliance tasks with quality and agility, without the need for advanced programming knowledge. This represents a significant advancement in how companies can use technology to remain competitive and innovative in today's market.
Generative artificial intelligence is redefining the role of the tax department in companies, turning repetitive tasks into strategic opportunities. With process automation and intelligent data analysis, tax professionals can take on a central role in generating business value, anticipating trends, and contributing to innovation.
As companies continue to invest in technology, the adoption of generative AI promises not only to reduce costs and increase efficiency but also to open up new possibilities for value creation. The era of strategic tax compliance has already begun, and those who embrace this transformation will be better positioned to lead in the future.
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