Key Challenges in Generative AI for Corporate Tax Departments

Generative AI in corporate tax: Woman in office using computer.

The Generative AI Revolution: What Tax Departments Need to Know

As we delve into the evolving landscape of corporate taxation, it's impossible to ignore the growing interest in generative AI (GenAI). Corporate tax leaders are buzzing with enthusiasm about the potential of AI to revolutionize their operations. However, a stark contrast exists between excitement and implementation. In fact, many tax departments are failing to harness the full potential of GenAI due to several key tensions that need addressing.

Understanding the Importance of GenAI in Corporate Tax

Awareness of generative AI's capabilities isn't enough; corporate tax departments must integrate these technologies responsibly to thrive. The 2025 Generative AI in Professional Services Report outlines five significant points of tension that should direct strategic planning efforts for tax leaders.

The Vendor Transparency Gap: A Major Concern

The first tension revolves around the lack of communication between tax departments and their service providers. Despite 77% of corporate tax departments desiring their service providers to employ GenAI, 59% are unsure if it's being utilized. This communication breakdown poses risks, as leaders cannot effectively measure performance, negotiate budgets, or analyze ROI without clarity on the use of GenAI.

Governance Policies: The Missing Element

Another notable issue is the absence of firm governance policies regarding the use of AI. It’s essential for corporate tax departments to have clear guidelines that ensure ethical and efficient use of AI technologies. Without such policies, organizations may face operational inefficiencies and regulatory headaches.

Skills and Training: Bridging the Gap

Interestingly, most organizations are not prioritizing GenAI skills during hiring or training, potentially undermining the technology's future role in tax operations. To stay competitive, tax departments must invest in training their teams on GenAI capabilities. By doing so, they can better leverage these tools to enhance productivity and precision.

Risks of Inaction: What Lies Ahead

If these tensions are left unaddressed, corporate tax departments are at risk of encountering difficulties in attracting top talent, inefficiencies in operations, complex vendor relationships, and challenges in budget justifications. Recognizing and addressing these challenges now can steer the tax department toward a more innovative and resilient future.

Moving Forward with Confidence

Embracing the generative AI evolution is no longer optional; it's a necessity for forward-thinking tax departments. By addressing the five key tensions outlined in this article, corporate tax leaders can enhance their operational strategies and align their departments for future success. The time to act is now—adapt, evolve, and lead the charge into this new era of corporate tax management.