Tax function: from cost center to strategic partner in the age of global complexity

The gauntlet has been thrown. For today's international tax directors, the operating environment is a relentless storm of escalating complexity. For them, and their teams, this complexity is magnified by evolving rules such as those on transfer pricing, Pillar Two implementation, ESG-linked tax transparency, and cross-border data reporting obligations. There's also a growing need for real-time reporting, audit trails, and collaboration across different teams. On top of that, boards and stakeholders are pushing for greater tax transparency and governance. Meanwhile, many tax teams are understaffed, overworked, and struggling to keep up with the sheer volume of compliance and strategic tax planning demands.  

In this high-stakes environment, merely staying afloat is a daily struggle. The challenges facing international tax departments are undeniable, but so are the opportunities. Traditional approaches, even when tech-enabled, remain reactive. Artificial Intelligence (AI) shifts the paradigm from reaction to foresight. The solution lies in embracing technology, specifically AI, not as a distant aspiration but as an immediate and indispensable ally.  

What if you could not only weather the storm but also harness its energy to propel your tax function into a new era of efficiency, insight, and strategic value? This is not a futuristic fantasy; it is the tangible promise of AI. This article will illuminate how AI can revolutionize your tax department, transforming it from a reactive compliance engine into a proactive, strategic partner for the business.

This article was written by Mario van den Broek ([email protected]) and Hans van Loenen ([email protected]). Mario and Hans lead RSM Netherlands Business Consulting Services, with a specific focus on Tax & AI.    

AI is not a threat to the tax professional; it is a powerful amplifier of their expertise. By embracing AI, you can empower your team to move beyond the reactive cycle of compliance and become a proactive, strategic force within your organization. The AI-powered tax function is no longer a vision of the future; it is the new standard for success. The question for every tax director is no longer if they will adopt AI, but how and how quickly. The storm of complexity will not subside, but with AI as your compass and your engine, you can navigate it with confidence and emerge stronger, more efficient, and more valuable than ever before

Challenges keeping today's global tax teams awake

Modern tax departments are navigating a perfect storm where the primary challenges include:

• The data deluge: The exponential growth in data required for tax compliance is staggering. Tax authorities are demanding more granular and real-time data, often spread across disparate ERP systems and in inconsistent formats. Tax teams spend an inordinate amount of time on low-value, high-risk tasks, such as gathering, cleaning, and reconciling this data.
• The regulatory tsunami: The pace and complexity of new international tax legislation are unprecedented. New global standards and local tax reforms require continuous monitoring, interpretation, and implementation. Keeping abreast of changes across multiple jurisdictions, understanding their intricate interactions, and modeling their impact is a near-impossible task for even the most dedicated teams.
• The talent scarcity: The demand for tax professionals with a blend of technical tax knowledge, data analytics skills, and technological proficiency far outstrips the available supply. This talent gap leaves many departments struggling to meet their ever-expanding responsibilities.
• The squeeze on resources: Despite their critical role in risk management and compliance, tax departments are often viewed as a cost center, facing constant pressure to optimize expenses.
• Time-to-action pressures: Timely responses to audits, transfer pricing documentation deadlines, and cross-border restructuring decisions are crucial.

AI offers a powerful lifeline to beleaguered tax departments, providing the tools to not only manage these challenges but to thrive in the new landscape. The complexity of international tax law is a perfect use case for AI's analytical power.  

Embracing the change

By embracing AI, the tax function can transcend its traditional role and become a true strategic partner to the business. At its core, AI excels at automating repetitive, rules-based tasks, freeing up your skilled professionals to focus on strategic, high-value work. More than compliance support, AI enables tax leaders to:

Model tax scenarios across jurisdictions before strategic decisions are made

• Predict audit exposure and reputational risk by analyzing patterns in filings and disclosures
• Quantify ESG-tax alignment and support integrated ESG reporting
• Support strategic decisions such as IP structuring, supply chain shifts, or entity rationalization with simulated outcomes.
• Compliance on autopilot: Leading accounting firms and technology providers now offer AI-powered solutions that automate significant portions of the compliance lifecycle. This means faster, more efficient preparation of VAT, corporate income tax, and other returns, with a significant reduction in the manual effort required.
• Error reduction and enhanced accuracy: By minimizing manual data entry and calculations, AI dramatically reduces the risk of human error. This translates to more accurate filings, a lower likelihood of triggering audits, and fewer costly penalties.
• Real-time regulatory monitoring: Imagine a system that constantly scans for tax law changes across the globe, analyses their relevance to your business, and provides instant alerts. This is already a reality. AI-driven platforms can track legislative updates, court rulings, and administrative guidance in real-time, ensuring your team is always informed and prepared.
• Impact analysis at your fingertips: Beyond simple tracking, AI can model the potential impact of regulatory changes on your company's specific financial posture. This allows for proactive planning and strategic adjustments, rather than reactive scrambling.
• Generative AI for instant answers: The advent of generative AI has provided a revolutionary tool for tax research. Platforms are leveraging AI to provide quick, sourced answers to complex tax questions. This empowers your team to get the information they need in seconds, not hours, dramatically accelerating research and decision-making.

AI shifts the paradigm of tax risk management from a historical review to a forward-looking, predictive function. Beyond time savings, AI significantly enhances compliance accuracy by consistently applying tax rules and continuously monitoring.  

The most transformative benefit of AI is enabling tax departments to shift from reactive compliance to strategic business partnering. By automating routine tasks, AI frees tax professionals to focus on higher-value activities such as tax planning, risk management, and providing strategic guidance to business units. AI-powered predictive analytics enable better forecasting and scenario planning, allowing tax departments to identify tax-saving opportunities and optimize global tax positions while maintaining full compliance. This strategic capability is particularly valuable for multinational enterprises navigating complex international tax planning requirements.

The tax function of tomorrow: a strategic powerhouse, but where to start

The journey to an AI-powered tax function doesn’t require a revolutionary leap; it can start with a series of deliberate steps. Forward-thinking tax directors are no longer just compliance guardians—they are digital orchestrators. Leading companies are embedding AI into their global tax policies not as an add-on but as a core enabler of control, insight, and agility. This is the future of tax leadership: AI-literate, data-empowered, and policy-driven. Tax directors should begin with:

1. Start Small, Think Big: Initiate a pilot project in a specific, high-impact area of your tax operations, such as indirect tax compliance or transfer pricing documentation. A successful pilot will build momentum and demonstrate the value of AI to the broader organization. Pilot projects in VAT, DAC6 flagging, or Pillar Two modeling
2. Partner with the Experts: You don't have to build from scratch. Collaborate with the major accounting firms and tax technology providers who have already invested heavily in developing and refining AI solutions for tax.
3. Invest in Your People: The successful adoption of AI depends on your team. Provide them with the training and development opportunities to acquire the skills needed to work effectively with new technologies. Train tax staff to collaborate with AI tools rather than compete with them.
4. AI Capability Mapping – Understand what AI can realistically automate or enhance.
5. Tax-AI Governance Framework – Ensure transparency, data quality, and model accountability.
6. Champion the Change: As a tax director, your leadership is crucial. You must be the champion for this transformation, articulating the vision and the benefits to your team, your C-suite, and the entire organization.

Forward thinking

The influx of international tax updates presents both challenges and opportunities for tax departments. AI offers not only a solution to manage the growing complexity but also a pathway to transform tax functions from struggling compliance operations into strategic business enablers.  

With automation managing the manual efforts, tax professionals can focus their expertise on high-value activities such as strategic tax planning, identifying tax-efficient supply chain structures, and providing essential input on major business decisions. The tax team can utilize AI to provide the C-suite with real-time, data-driven insights that inform key strategic initiatives, ranging from mergers and acquisitions to new market entries and product pricing.  

The skill set of successful tax professionals is evolving. Proficiency in data analytics and technology will become as vital as technical tax knowledge. The future belongs to those who can effectively collaborate with AI to deliver strategic value.  

AI empowers tax teams to move beyond survival mode. It enables a proactive, policy-driven approach to global tax management, transforming fragmented information into strategic foresight. For understaffed teams facing global tax complexities, AI isn’t just an option; it’s the future. The global tax function of tomorrow will not resemble that of yesterday. Those who embrace AI will lead the next era of tax innovation—delivering greater value, resilience, and foresight.  

For tax directors aiming to future-proof their departments, the question is no longer “if” to adopt AI, but “how.” For tax directors considering AI implementation, the issue is not whether to adopt these technologies, but how quickly they can be effectively implemented. Organizations that act now will build competitive advantages that compound over time, while those that delay risk falling further behind in an increasingly demanding regulatory environment.  

RSM is a thought leader in the field of Business Transformation with a strong focus on AI consulting. We provide frequent insights through training and the sharing of thought leadership, based on a detailed understanding of industry developments and practical applications gained from working closely with our customers. For more information, please contact one of our consultants.