How mixed reality and AI have the power to transform tax

Mixed reality leveraging tools such as Microsoft technologies helps tax leaders build a modern tax function.

Nowhere seems immune to what World Economic Forum founder and executive chairman Klaus Schwab has called “The Great Reset.” The challenge for tax teams is to adapt to a new world where the demands of transparency, digital tax administration and the pace of regulatory change are all increasing. Meanwhile, budgets are under pressure and many traditional ways of collaborating are deemed unsafe or uneconomical.

In this challenging environment, there is a clear need for tax functions to undergo their own great reset – to rethink and reframe the world so that tax teams remain fit for purpose.

Kurt Neidhardt, EY Global Tax Technology and Transformation Co-Leader, stressed this point in his welcome address during the recent EY Tax.Tech 2020 virtual conference.

He told delegates: “When we talk about reframing, we mean seeing the current situation from a different perspective – meeting today’s challenges in innovative ways, repositioning ourselves and our organizations to be agile and fit for the future.

“A key part of that is what we call ‘building an intelligent tax function.’ One that thinks about data differently, embraces innovation – as well as advanced and emerging technologies – to fuel continuous transformation.”

One innovation showcased during the conference was mixed reality (MR). Neidhardt demonstrated in detail how this emerging technology has the potential to reframe the tax practitioner’s world.

What is mixed reality?

MR is defined as “the merging of real and virtual worlds to produce new environments and visualizations, where physical and digital objects co-exist and interact in real time.”

Referring to MR as “the next level of human, computer and environmental interaction,” Neidhardt told delegates: “Technology is changing at record speed. We’re already seeing the physical world blending with the digital world and that’s creating a new realm called mixed reality.”

The stage has already been set perfectly for this next level of interaction. Collaboration software has been the “killer app” of lockdown. Products such as Microsoft Teams and Slack have driven global work-from-home (WFH) productivity.

“We all now know what it’s like to work from home,” Neidhardt said. “But what if you could do more than share your screen? What if you could share the next level of connectivity and collaboration in an interactive environment that also gives you easy access to information, analysis and ideation in real-time and in 3D?

“This technology is moving us from our typical 2D interactions into the world of 3D. It’s not just for video games anymore. Mixed reality takes on the challenges of today’s working world, enhancing both the business of tax and the client experience.”

Real-time remote collaboration in an MR space

The core of Neidhardt’s presentation centered on an end-of-quarter tax provision review featuring Microsoft’s leading MR solution HoloLens 2 and an artificial intelligence (AI) powered virtual assistant called Wavey.

Despite being in different locations, three EY tax practitioners and two EY clients were able to collaborate, review data and documents, and create tax services in real-time using MR.

During the demonstration, Wavey used its AI capabilities to proactively advise the tax team, prioritize their tasks and act as a voice-activated interface controlling HoloLens 2.

This showed how reviewers were able to request, view and manipulate 3D graphs, documents and spreadsheets that, thanks to their HoloLens 2 glasses, seem to levitate in front of them in the MR space.

The team’s taxable income review included retrieving virtual tax adjustments documents, tax scenario plans, deferred compensation and benefits, requesting year-on-year overlays, discussing how best to use deferred tax assets and adding review notes as they progressed to review sign off.

Throughout the virtual tax review meeting, the EY tax teams and their clients could see and interact with each other in the MR space as though they were attending a physical meeting. Their faces were superimposed on computer-generated avatars that moved, gesticulated and shared body language.

Microsoft isn’t the only tech firm betting on MR. Andrew Bosworth, Facebook’s Head of Augmented Reality/Virtual Reality, recently shared what their MR workspace looked like.

Major investments like these in MR by big tech firms such as Microsoft and Facebook suggest this is the direction of remote collaboration in the years to come. With the rise of the intelligent tax function and the need to reframe the tax world, MR could prove to be a very useful tool indeed.