MAJORITY of chief financial officers (CFOs) and tax leaders in Southeast Asia (SEA) are only in the early stages of adopting generative artificial intelligence (GenAI) to streamline their workflows, according to a survey by professional services firm SGV & Co.
The latest EY Tax and Finance Obligations survey showed that 92% of Southeast Asian CFOs and tax leaders said their organizations are only beginning to adopt GenAI, higher than the global average of 75%, SGV said.
This, even as 82% of the respondents in the region said they believe GenAI will drive “increased efficiency and effectiveness” in tax and finance functions, up from 14% in 2023.
The 2024 survey covered 1,600 CFOs and tax professionals across 32 jurisdictions and 18 industries, including 66 in Southeast Asia, with respondents coming from Indonesia, Malaysia and Singapore.
The report said 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 revolutionizing the tax and finance function by helping to manage complex reporting tasks and large amounts of data. 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 organizations,” EY Asean Tax and Finance Operate Leader Elaine Yeo said in a statement.
“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, organizations 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,” Ms. Yeo said.
The survey showed that cost was the top concern for respondents as cost-cutting and inflation are eroding tax and finance functions’ budgets. Some 40% of respondents in Southeast Asia said effectively managing budgets is their top priority and 80% are looking to cut costs.
“The survey 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,” SGV said. “These obligations also include complying with the adoption of recommendations by the OECD (Organisation for Economic Co-operation and Development), 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.”
The sector is also dealing with talent shortage, as 77% of tax and finance leaders in Southeast Asia said they are feeling the impact of fewer accountants entering the profession while their seniors retire.
“More than half (SEA 55%, global 53%) say they are struggling to retain and attract qualified people. The survey further reports that 64% of SEA respondents (global 62%) believe that employees without a university degree are an increasingly important source of talent.”
Still, 56% of respondents in Southeast Asia said they believe that GenAI will not lead to a reduction in the tax function workforce, as firms will instead reallocate employees’ time to “more strategic, high-value activities and away from routine compliance tasks,” SGV said.
“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 budget constraints and the need to invest in technology and GenAI,” Ms. Yeo said.
“Generative AI is poised to significantly impact the tax and finance functions in the Philippines, helping to streamline processes and enhance compliance with evolving tax regulations. As businesses in the Philippines navigate the complexities of digital tax administration, BEPS, and global minimum tax requirements, the adoption of GenAI will be crucial in addressing talent shortages and improving operational efficiency,” SGV Tax Partner Frances Rose J. Villamayor said. — B.M.D. Cruz