Building an AI strategy for lasting tax transformation

With the right foundations in place, advanced technologies can add sustainable value across the entire tax function.

One of the biggest challenges when adopting technology to transform the tax function remains getting started. Taking AI as an example, many organisations recognise its potential but struggle to identify the right first use case, often beginning by choosing a specific process to automate and then applying an AI capability to it. While the use case may be sensible, it can sit within a weak overall data and systems environment. The result can be disconnected improvements without the support of a coherent operating model. 

Scaling AI safely across the tax function 

Increasingly, developing an AI data strategy requires redesigning the underlying data architecture, automating connected processes and analysing how advanced technologies can create value across the entire tax function. It also requires organisations to implement a change management cycle that builds AI trust, integrates new technology into processes and addresses stakeholder impacts. 

Equally, it’s important to balance implementation speed with risk and engage the right people to deliver meaningful change. It starts by choosing a project with enough impact to demonstrate value, while assembling the internal and external partnerships needed to scale it. Better data and systems allow tax teams to understand positions much closer to real time and test future scenarios. When information arrives while there is still time to influence the decision, it fundamentally changes the contribution tax can make across the business. 

In addition, new specialist capabilities in data architecture, data engineering, AI and pipeline management will be required to bridge any skills gap and should be incorporated into the change management process. Putting the right governance guardrails is equally important. The key to safe use of AI and emerging technologies is to review and update governance frameworks so they can be scaled with control and visibility.  

The implication for tax leaders is clear. Adopting new technology is no longer just about making the tax function more productive; it increasingly underpins broader organisational transformation. It’s an approach that demands leadership, investment, collaboration and a willingness to challenge familiar ways of working. 

Making tax information reliable and accessible 

Treating data as a strategic asset is essential. For tax functions seeking sustainable transformation, the starting point is not the latest tool but the quality, structure and accessibility of the information behind it. As digital reporting requirements develop, the quality of the underlying transactional data becomes more important. 

Tax departments have traditionally operated across multiple systems, often managing different tax, VAT and reporting obligations through separate technology and data sources. This fragmentation creates a significant challenge as organisations look to apply new technology more broadly. 

Moving beyond generative AI to build connected tax solutions  

With AI making it possible to connect information in new ways, the opportunity now exists to move past isolated processes towards a more integrated view of the tax function. While the ability for generative AI to suggest text, summarise documents, analyse data, and help automate and enhance tax compliance is already available, greater ambitions need to be considered. It means treating data as a strategic asset rather than an administrative by-product. Specifically, organisations need to understand where tax-relevant information originates, how it moves through their systems, who owns it and whether it can be trusted and reused. 

Another important consideration is to ensure data solutions are not designed too narrowly. Taking a broader view at the outset can help organisations identify common data requirements. This ensures that a dataset developed for one tax process may also support others, including tax provision, transfer pricing and indirect tax compliance. This not only avoids duplication but makes subsequent transformation initiatives easier to deliver. 

The objective is not simply to collect more data. It is to create a reliable, connected and governed data foundation that allows tax professionals to spend less time preparing information and more time analysing it, managing risk and supporting decisions. 

Putting business value at the centre of tax transformation 

Efficiency has long been an important driver of tax transformation. Automation can reduce repetitive work, improve consistency and release capacity in teams under pressure. However, organisations that gain the most from transformation begin with a broader question: what value do they want to create? 

Using new technology for the sake of it is no longer a strategy. Successful teams define an outcome, establish how tax can contribute to the business and then identify the technology, data and operating model needed to deliver it. That outcome might involve reducing tax risk, identifying savings opportunities, improving the management of legal entities or providing decision-makers with more timely information. 

Key to this approach is what that information enables. Rather than waiting for a reporting cycle, decision-makers can examine tax positions across jurisdictions or business units and use those insights in planning. This broader ambition moves from retrospective to proactive reporting that helps understand the implications of decisions before they are made. 

It’s a shift that changes the contribution tax makes to the business. With better information, tax teams can help assess the consequences of acquisitions, evaluate scenarios and identify potential costs or benefits earlier. Equally, the importance of measuring AI outcomes accurately is vital. Relevant indicators might include reduced manual effort, shorter tax close cycles, greater automation, fewer compliance errors and less time spent preparing data.

The overall lesson is that technology should follow value, not the other way around. Tax leaders need to articulate the business problem, define the desired outcome and establish how success will be measured before choosing a solution.   

How CFOs and Heads of Tax can drive transformation together 

Tax transformation rarely succeeds within the tax department alone. Much of the information it relies on originates in wider finance and accounting processes, while the changes required often extend across several business functions. Improving the final stage of tax reporting without addressing problems further upstream can limit the benefits. 

Heads of Tax have a central role in identifying where transformation can make the greatest difference, from improving data quality and managing risk to providing better insight for business decisions. Yet delivering these improvements may require investment, resources and changes that extend beyond their direct control. 

This is where CFO sponsorship becomes particularly valuable. By aligning priorities across finance, resolving competing demands and securing investment, CFOs can help overcome the organisational barriers that might otherwise slow progress. 

Successful transformation depends on both roles working closely together. Heads of Tax should help shape the strategy, establish priorities and lead the changes needed within the function. CFOs can provide the broader support and accountability needed to embed those changes across the business. 

Together, they can ensure that tax transformation delivers lasting improvements, with clear ownership of the work and a shared understanding of the value it should create.

Spotlight: can your systems and data meet e-invoicing requirements? 

The European Legislation on e-invoicing requires public entities across the EU to receive and process structured electronic invoices. The primary objective is to reduce VAT fraud and provide tax authorities with accurate sales and purchase data. However, as EU countries are implementing reforms using different regulations and technical models, the lack of harmonisation creates challenges for companies using shared providers across multiple EU countries. 

In particular, companies need to adopt robust internal controls to check that data sent through authorised platforms accurately reflects their business, together with regular reconciliation of electronic sales and purchase invoice data with accounting records and VAT returns. The key risk is gaps between accounting entries, reported VAT figures and invoice evidence. For example, some clients have been unable to  download or retrieve supporting invoices from their ERP system, without which companies may be unable to substantiate VAT credits or defend their VAT position to tax authorities. 

The operational impact is that organisations face significant implementation costs, ERP integration difficulties and new requirements to reconcile accounting data, VAT returns, invoices and supporting documents. At the same time, accounting teams are expected to reduce routine work through automation while taking on additional controls. All of which creates uncertainty about workload management. 

Data quality is a further issue. As e-invoicing reporting requirements increasingly involve structured digital information, businesses need to ensure that tax-relevant data is captured correctly and moves reliably through their systems. 

It requires coordination across finance and IT, with processes designed to ensure that invoices are accurate and usable by customers and other stakeholders. The commercial consequences matter. An invoice that cannot be processed correctly can create payment problems, turning a technical or data issue into a cash-flow concern. 

The tax transformation agenda: five priorities for the next 12 months 

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