Building the future of smart
Another big disruptor to the tax department is framed by one of our identified megatrends for 2016 and beyond, “the future of smart.” As defined by EY, “smart takes a transaction, ensures it is connected, analyzes its data and makes it more autonomous and effective.”
The sea change for taxation is that smart tax is real-time and even forward-looking — where tax has traditionally been historical.
Multiple smart technologies are colliding and hitting their critical inflection point at the same time:
- Business process robotics will help automate data collection.
- The internet of things will minimize paperwork.
- Artificial intelligence (AI), which is becoming more prevalent in such day-to-day settings as web searches, weather forecasting and voice recognition applications, will enable data mining and deep learning
- Blockchain, most simply described as a secure, distributed digital ledger, is not only poised to break into the world of business and finance, but is also tipped to merge its transactional capabilities with AI’s cognitive capabilities for autonomous transactions that can self-initiate, self-manage and self-retire.
- Big data analytics is already enabling better decision-making through data storage, aggregation, cleansing, integration, consolidation and analysis — including predictive analytics.
The disruptor: digital governments
In the future, traditional accounting, finance and tax functions will be revolutionized by robotic process automation and new systems that offer real-time collaborations, scenario planning, cost modeling and risk simulation tools.
Repetitive, high-volume tasks will be performed by a virtual workforce of software robots that can work faster, more inexpensively and more accurately than a human being.
AI will be loaded with such information as tax code, case law and administrative guidelines, and AI will make certain decisions on this basis.
“Tax professionals will be redeployed to higher-value activities that require subjective judgment and strategic decisions,” says EY’s Suhr. They will be supported by real-time data aggregation, data visualization and predictive forecasting — allowing people to focus on unlocking value within accounting, finance and tax, rather than being burdened by their compliance or reporting function.
Clearly, the tax world is going through a daunting transition. But EY’s Flynn summarizes the situation simply: “Technology is enabling tax authorities to become more efficient and robust at assessing and collecting tax, and technology can also help companies get ready for that.”
A version of this article was originally published as Disruption puts corporate tax on an uncertain path on Tax Insights.