Businesses are grappling with the complexities of tax compliance and are turning to artificial intelligence (AI) for advisory services. While AI offers the potential to handle vast amounts of data and information, there are doubts about its ability to replace human expertise in specific areas like corporate tax.
Despite advancements in AI development, its effectiveness in dealing with highly complicated tax issues remains uncertain. AI software, often referred to as a “sea basin trawler,” scours the internet for data but struggles to provide accurate and reliable responses, especially in areas that require deep subject matter knowledge.
The key distinction between a narrow AI machine and a human tax expert lies in their abilities and insights. While AI excels at processing data, it lacks the internal understanding of context that comes naturally to empathetic human beings. This is what sets human tax experts apart from AI machines, as they possess strong analytical skills and a firm grasp of complex tax matters.
Compliance challenges are on the rise for businesses in the UAE, driven by the country’s evolving regulatory system. The UAE’s corporate tax regime has introduced intricate regulations that companies must navigate. Mistakes in application and implementation, such as incorrect tax rates on invoices, highlight the need for human involvement in tax-related matters. Although AI-driven solutions may be appealing, the human element is indispensable when dealing with the intricate and nuanced aspects of tax compliance.
One common mistake is the confusion between VAT and corporate tax, leading to incorrect invoicing and potential penalties for businesses.
In order to ensure fair and compliant reporting, organizations operating in the UAE must address compliance risk management and financial resilience through proper documentation, alignment with recognized rules, and adherence to tax regulations. As businesses adapt to changes in the taxation model, accurate and compliant reporting is crucial for effective financial functioning.
Source: Ministry of Finance in UAE
