As businesses try to come to terms with the complexities of tax compliance, the use of artificial intelligence (AI) in advisory services is an area of interest. Although AI provides an un-paralleled opportunity for vast amounts of data and information, there are still questions as to whether it can substitute human expertise in narrow areas such as corporate tax.
Despite the notable advancement of AI in development, it remains rather uncertain in handling extremely complicated and complex tax issues. Though AI software, commonly known as a “sea basin trawler,” fishing the online world for data has problems in accurately and reliably providing responses even in areas that require extensive subject matter knowledge.
The contrast between a narrow AI machine with few abilities and insights and a human tax expert with a tough mind and complex analytical skills is what differentiates the human tax expert from the AI machine. While AI has the edge in data processing, it lacks an empathetic human being’s internal understanding of context.
Navigating compliance challenges
The UAE’s firms are witnessing a growing need for full tax compliance that is being driven by the development of its regulatory system. The corporate tax regime of the UAE has put companies into a land of intricate regulations. Misapplications and implementational mistakes, such as an incorrect application of tax rates on invoices, illustrate the need for the human aspect in tax-related matters. AI-driven solutions may be very appealing, yet the human element is irreplaceable while dealing with complex and nuanced aspects of tax compliance.
One of the quite common mistakes is the equating of VAT with corporate tax, which results in the wrong issuing of invoices and may threaten businesses with penalties.
Making reporting fair and compliant
Under the increasing regulatory environment, organizations must address compliance risk management and financial resilience through reporting and regulatory requirements. The execution of a compliance project involves the application of all sides of the business operation, documentation of the processes, and compliance with tax regulations.
We ought to understand that it is really important to understand tax compliance regulations, have proper documentation, and align with recognized related rules. As businesses are still adjusting to the changes in the taxation model, that is the state that they need to concentrate on accurate and compliant reporting for effective financial functioning.
Source: Ministry of Finance in UAE
