Chief financial officers are looking forward to the transformative power of generative artificial intelligence (GenAI) even amid rising cost and regulatory challenges, according to a recent study by EY.
The latest EY Tax and Finance Operations (TFO) Survey reveals that GenAI will be of help in transforming tax and finance functions, as it aids to address inefficiencies, talent shortages and compliance with emerging reporting obligations, including those related to global minimum taxes.
However, while 82% of CFOs and tax leaders in Southeast Asia say GenAI will drive increased efficiency and effectiveness, 92% say they are only in the early stages of their GenAI journey.
The survey, which polled CFOs and tax professionals across 32 jurisdictions and 18 industries, including 66 in Southeast Asia covering Indonesia, Malaysia and Singapore, concludes that tax and finance functions will need to transform to contend with growing cost pressures, a talent deficit and compliance with new tax regulations.
"Technology, including GenAI, is revolutionising the tax and finance function by helping to manage complex reporting tasks and large amounts of data," says Elaine Yeo, Asean tax and finance operate leader at EY.
"It helps to empower tax professionals to adopt a transformative mindset, allowing them to be more efficient, focus on more strategic tasks, and make better and quicker decisions. This will help them unlock value for their organisations," Yeo adds.
Yeo notes that for tax and finance professionals in SEA, they need to consider future-proofing the tax function by developing a plan to deploy GenAI responsibly and with confidence.
"This plan should consider allocating financial resources efficiently to the tax function. Effective change management strategies should be implemented to guide the embedding of technology into tax processes. By doing so, organisations in SEA can strive to stay ahead of the curve, and be well-positioned to navigate in the modern and complex world of digital tax administration."
Cost is now the biggest barrier to achieving vision and purpose
Cost pressures emerge as the top concern for respondents, with cumulative cost-cutting and inflation significantly eroding tax and finance functions’ budgets in real terms. Forty-one percent of Southeast Asia respondents say effectively managing budgets is their top priority and 80% are looking to cut costs.
Regulatory and reporting pressures drive need for data and tech transformation
The study further highlights that tax functions face an increasing urgency to manage more complex and data-heavy tax responsibilities. This includes real-time digital tax filings and e-invoicing that is soon to be required in nearly 100 countries. These obligations also include complying with the adoption of recommendations by the OECD, such as Pillar Two of the base erosion and profit shifting project (BEPS 2.0), which urges countries to set global minimum tax of at least 15% for large corporations.
In Southeast Asia, 38% of organisations anticipate a considerable number of adjustments to source Pillar Two reporting data, and 83% expect to make moderate to significant changes to their reporting processes.
"Mounting regulatory and reporting pressures, including the complexities of BEPS, continue to strain tax and finance functions," says Yeo. "Many businesses are still grappling with data availability, quality and reconciliation to support compliance and strategic decision-making. Leveraging data reuse and intelligent agents is a powerful solution to help address these challenges, allows tax and finance functions to work more effectively and focus on growth and innovation."
Talent pressures on tax and finance functions approach crisis levels
The EY study also found that talent gap is now a critical challenge, as 77% of tax and finance leaders in Southeast Asia feel the impact of fewer accountants entering the profession while senior cohorts retire.
Fifty-five percent say they are struggling to retain and attract qualified people. The survey further reports that 64% of Southeast Asia respondents believe that employees without a university degree are an increasingly important source of talent.
Fifty-six percent of reponsdents say GenAI will not lead to a reduction in the tax function workforce. Instead, companies will reallocate their tax and finance employees’ time to more strategic, high-value activities and away from routine compliance tasks.
According to Yeo, the talent gap has reached crisis proportions.
"Employees are being called on to do more with less, but businesses also want tax professionals to spend twice as much time on strategic tasks than they do on routine work. To facilitate this, many businesses are looking to co-sourcing as a solution, particularly with the budget constraints and the need to invest in technology and GenAI."
