Unlocking Business Potential: Steps to Enhance Technology Agility in Indirect Tax

The GenAI Paradox: Why Tax Departments Delay AI Adoption Despite Clear Benefits

Update Understanding the Tax Technology Adoption Paradox In the world of corporate tax, the buzz surrounding generative artificial intelligence (GenAI) has been undeniable. Yet, surprisingly, a significant number of tax departments are still hesitating to embrace this powerful tool. A recent report from the Thomson Reuters Institute highlights that a staggering 67% of corporate tax departments have yet to integrate GenAI into their workflows. Despite this, 57% of departments that are looking to implement new technologies do express a desire to incorporate GenAI, revealing a complex paradox of cautious optimism amid real challenges. The Heavy Weight of Resource Constraints Many tax departments are grappling with significant resource constraints. With 58% of respondents acknowledging that their teams are under-resourced—an increase from 51% last year—pressure mounts to maintain compliance while trying to innovate. This dual focus leaves little room for experimentation with new technology. Interestingly, professionals in these departments spend more than half of their time on reactive work related to compliance, which hampers the exploration of transformative tools like GenAI. Early Adopters: A Glimpse into the Future While many hold back, those that have ventured into the realms of GenAI are reaping considerable rewards. Early adopters report that GenAI has helped streamline tasks such as conducting research and enhancing communication. Most importantly, these departments emphasize that the technology has positively shifted their focus towards proactive, strategic work—a sector where they desire to spend two-thirds of their time. GenAI allows them to automate repetitive tasks, freeing up valuable time to concentrate on deeper analytical work. Global Trends in GenAI Adoption Notably, GenAI has found a foothold across the globe, with companies in various countries now utilizing it to simplify tax-related processes. Especially for multinational corporations dealing with diverse tax obligations, GenAI offers a significant advantage. By operating across multiple jurisdictions, organizations can streamline their operations and improve efficiency with GenAI-powered insights. The Importance of Resources and Confidence Levels A key insight revealed by the data is the correlation between departmental resources and confidence levels in executing crucial tasks. Well-resourced tax departments enjoy higher confidence: 43% believe they can deliver timely forecasts, compared to only 26% of those who feel under-resourced. The ability to rely on modern technology reduces the risk of errors and penalties, stressing the importance of investing in the right tools. Looking Ahead: What Lies Beyond GenAI? As tax departments begin to integrate new technologies, the attention should not only remain on GenAI. A report indicates that 36% of departments plan to implement machine learning, and around 17% are curious about exploring more advanced AI technologies. This denotes a progressive shift towards a new era in tax functions—one that leverages technology to ease many of the burdens traditionally faced by tax professionals. The journey for tax departments is fraught with challenges and opportunities. As they navigate this transformative landscape, clear strategies and the right support can define who becomes an early adopter of technology versus those who lag behind. To stay ahead in today’s rapidly changing tax environment, fostering a culture of innovation alongside resource optimization will be crucial. Tax professionals are encouraged to leverage GenAI not just as a tool but as a partner in achieving efficiency and strategic expertise. Join the conversation about how to leverage your tax department's potential. Engage with your peers and share insights on overcoming barriers to technology adoption!