GenAI and the evolution of indirect tax: Why, where, and how
Learn how to harness the power of GenAI in the Indirect tax function.
Indirect tax is complex. GenAI is already essential.
With large volumes of data across multiple systems, jurisdictions, and tax types, managing indirect tax can be a challenge for many companies, even before adding in complicating factors such as incomplete data, multijurisdictional footprints, tight compliance timelines, and increasingly aggressive audits.
This growing complexity is a key reason that indirect tax has become the tip of the spear when it comes to embracing new technology like generative artificial intelligence (GenAI).
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GenAI and the evolution of indirect tax: Why, where, and how
Download PDFIndirect Tax Requirement Steps - and the value of GenAI
Master data requires accurate addresses, exemption certificates, validated VAT/GST numbers, SKU classifications, and more. Focusing on the accuracy of master data is not a fresh concept and there are a number of solutions already available in the market to target these requirements. But, there’s also a meaningful role for GenAI in filling data gaps, identifying anomalies, and assigning appropriate tax categories.
GenAI can combine publicly available tax information with your tailored business data, such as direct pay permits, R&D exemption certificates, or manufacturing certificates based on location or use. It can help direct your customers or vendors to point them to the right exemption certificates. In addition, its complex algorithms and pattern identification processes can be used to spot anomalies in your sales and use tax data which can limit future exposures.
Tax engines remain the solution of choice for integrating with your core ERPs and business systems to calculate and report indirect taxes. While we don’t currently see a fit here for GenAI, we do see other solutions such as robotic process automation (RPA) to automate data extractions from various business systems to better automate the compliance process.
GenAI can review transactions based on the line description and potentially fix upstream data errors that came from procurement or accounts payable solutions such as identifying misclassified purchases.
Canned software is still a popular way to create tax returns, along with custom solutions when needed, and data analytics tools to obtain, consolidate, and validate data. But, as with data review, GenAI is excellent at acting as a second set of eyes that doesn’t think like a human in order to seek out compliance anomalies.
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