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Study: Artificial Intelligence within taxation
Key Facts

In the goods declaration for customs tarifs AI technologies from the fields of Process Mining and Machine Learning can be used to classify information from various upstream systems, which reduces the likelihood of errors and saves a large amount of time.

  • AI technologies can also help with the extraction of information (e.g. text mining in connection with optical character recognition) and ensure that formal invoice verification for VAT purposes is complete and correct.
  • Within risk management, AI technologies such as anomaly detection and process diagnostics help to monitor key gures of relevance to taxation.

Dear Reader,

“AI experts wanted urgently in tax department.” Don’t be surprised if you see this job vacancy advertised a couple of years from now. Artificial Intelligence-based digitalization is helping innovation to take great strides forward – and this includes innovation in the field of taxation. To play a proactive role in shaping the general set-up for this, WTS and the German Research Center for Artificial Intelligence (DFKI) have pooled their expertise in a joint study called “Artificial Intelligence within taxation”.

Tax departments have to process an enormous amount of data, digitise this data, and also observe complex statutory provisions and strict compliance requirements. This provided the starting point for our innovation study. The findings are promising: We have established that using Artificial Intellingence is potentially of enormous benefit in the field of tax consulting and various fields of taxation, offering substantial potential for assistance and automation. As a result, tax professionals will have more time for specialist consulting and organizational tasks.

Mass data can be processed by innovative tax tools – a number of which are already available on the market – and these can now be further developed based on our findings. The main task of human beings will still be to think creatively in order to come up with innovative ideas and approaches, but they will increasingly be using self-teaching AI systems to analyse documentation and provide support when making decisions.

As part of the study, we also developed forward-thinking AI applications for the “tax workplace of the future”. The findings also tell us how tax professionals can set the right course now in order to master the challenges of digitialization and continue to be successful. The use of Artificial Intelligence can yield enormous benefits in the field of taxation, so let’s work together to make the most of this potential!

Yours,

Fritz Esterer and

Professor Wolfgang Wahlster


Fritz Esterer, Chief Executive Officer of WTS Group AG Steuerberatungsgesellschaft, and Professor Wolfgang Wahlster, Director and CEO of the German Research Center for Artificial Intelligence (DFKI)

Contact
Vanessa Just
Project Lead AI
Germany

Study findings and prospects: How Artificial Intelligence can be applied to taxation

In our practical innovation study, we have jointly investigated the potential that Artificial Intelligence (AI) holds for the field of taxation and how it will impact the work of qualified tax advisors.

The findings are extremely exciting and of practical relevance even at this early stage:

We have developed central AI technology modules for the tax types we investigated, and evaluated these in terms of concrete opportunities for implementation in practice. In customs declaration procedures, for example, AI technologies from the fields of Process Mining and Machine Learning can be used to classify information from various upstream systems, which reduces the likelihood of errors and saves a large amount of time. AI technologies can also help with the extraction of information (e.g. through text mining in connection with optical character recognition) and ensure that invoice verification for VAT purposes is complete and correct. This makes intelligent automation of complex routine tasks a possibility. In risk manage-ment, AI technologies such as anomaly detection and process diagnostics help to monitor key figures which are relevant for taxation. They can also provide support during compliance checks of relevant data. Tax risks can be greatly reduced as a result.

Within the end-to-end processes that we looked at, we have identified a number of scenarios in which AI can be used. For example, we looked at how AI can be used to help ensure that benefits-in-kind are assessed correctly from an income tax perspective, through the use of AI technolo-gies in document analysis, information extraction and classification of unstructured transactional data. This can instantly lead to tremendous increases in productivity and improvements in quality.

AI can be used to automate tasks that require little social intelligence and creativity and few interactions with the surrounding environment. Consequently, wide-reaching changes to the spectrum of activities in tax consulting are to be expected.

Prospects

As part of a long-term strategic partnership, WTS and DFKI are working together to advance scientific research into AI and taxation. We are also cooperating with leading international companies to develop new concrete application scenarios as well as to add AI elements to existing tax tools and further develop our software proto-types. With the findings of our joint research, we aim to create practical AI solutions that are ready to use in the field of taxation – and by doing so make the most of AI’s potential for tax consultants and their clients.

Support in managing the interface between tax consulting and IT expertise

Thanks to our WTS Tax Tools, we are already in a position today to tap into the potential for digitalization and open up the opportunities available for using AI methods in the field of taxation. This will make it possible to improve quality and increase the level of automation in practice.

After all, our WTS Tax Tools enable companies to quickly and easily retrieve information on their tax situation, identify potentials for optimization and, last but not least, to ensure that they are meeting tax reporting requirements.

WTS ITAX Portfolio

Our portfolio of Tax Tools covers different areas and processes in taxation. Mass data validation, tax treatment and assisting users via tool-supported decision-making processes are particularly relevant.

As such, tax-exempt users should, via integrated decision trees, also receive guidance ensuring that their respective circumstances are assessed correctly from a tax perspective (i.e. via “guided processes”).

We have developed the WTS Tax Tools as Best Practice solutions, drawing on the expertise of our professionals from different departments. Today, thanks to integrated analysis and processing of mass data based on sets of tax rules, our Tax Tools make it possible to tap into the future potential of digitalization in the tax field.

As digitalization and the use of AI instru-ments will mean that routine activities can be automated and the amount of laborious individual analysis can be reduced, people working in tax will be able to focus more on quality and efficiency in the future.

Our products:

 

  • WTS CbCRmanager: Fulfilment of documentation requirements set by OECD/local legislation
  • WTS EVENTmanager: Taxation of benefits-in-kind in accordance with Section 37b EStG, the German Income Tax Act
  • WTS GewStManager: Processing and administration of trade tax breakdown and statement processing
  • WTS TPmanager: Supports active transfer pricing management and structuring of global documentation
  • WTS VATmanager: Management of VAT compliance activities
  • WTS VAT-IDchecker: Checks European business partners’ VAT IDs
  • Link -> http://www.wts.de/en/content/itax_tools.php

 


Additional Information

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