AI is changing the world, and its impact is already felt across multiple, if not all, industries. One such industry/ sector of the economy is the tax world. AI is facilitating automation, tax reporting, while also improving automation.
In many ways, AI is revolutionizing and reinventing the finance world, particularly the tax functions. While everyone in the tax sector is accustomed to the constant disruptions compared to all other professions, AI and changes in legislation are expected to make things easier. AI is expected to significantly shift risk and compliance management as the industry expects more data-driven and transparent organizational cultures.
AI is expected to handle simple and complex tax functions. These functions include:
The automation of the reporting and decision making processes
If you work in tax planning Calgary, you know that the routine tasks involved in the word of tax are not only time consuming, but also too repetitive and the tasks could easily get boring. These tasks also fill your day, and it might seem as if you’re not working as much. But, AI is changing things. Thanks to the machine learning algorithms, as well as optical character recognition and also voice recognition technologies, these tax functions have been simplified immensely.
The intelligent algorithms are capable of categorizing different sales into the right jurisdictions for the management of sales tax calculations. These technologies are also capable of scanning and analyzing employees’ expense reports and then determine the deductions available thanks to the type and the amount of the expenses.
It should be noted that while machine learning technologies need some level of thought, they aren’t as complex and some of the necessary tools could be installed and also managed by you or any other tax professional.
Improved tax forecasting
Forecasting is the simplest, but also the most obvious application of AI as well as predictive analysis. This comes from the fact that algorithms first determine trendlines and then based on the trendlines, they either extrapolate or interpolate those trends for predictions using the new data. While most professionals employ several basic techniques in tax forecasting, AI is a gamechanger as it can detect trends in different tax filing cycles easily. What this means is that AI technologies can address the simple questions of what happens next should a current trend continue.
Pattern recognition is an important part of human nature, but it’s even more important in the tax world. While our minds detect patterns all the time, it’s an undeniable fact that we’re not too fast and this is where AI comes in. AI and machine learning technologies are fast, and they can identify patterns and classic behaviors such as companies with similar tax characteristics, the grouping of tax implications, and expense generating behaviors, among others. This is all because clustering is the most important technique applicable in tax data analysis.
Enhancement of the dashboard monitors
Thanks to the rise of cloud computing, you can now use the dashboard to collect actionable data and actions, which are all based on machine learning algorithms. Now, a simple dashboard gives you a peek into the day’s receipts or the sales tax liabilities, but if that dashboard were informed by AI, it would be so much more dynamic, allowing you to use this system not only to predict/ anticipate the future.
AI would also mean more of the virtual support systems and the use of natural language processing (NLP) for the automation of the identification of the meaning in words and data.