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EY has unveiled its 2024 Tax and Finance Operations (TFO) Survey, capturing insights from 1,600 CFOs and tax professionals across 32 jurisdictions and 18 industries. The survey offers an in-depth analysis of the ongoing transformation in tax and finance functions. The 2024 findings emphasize the growing role of generative AI (GenAI), regulatory and reporting pressures, rising cost, and the urgency to address talent shortages. Conducted between June and July 2024, EY´s survey explores how companies are navigating these challenges while preparing for new regulatory requirements.

KEY FINDINGS

I. GENAI ADOPTION FOR EFFICIENCY

• 87% of CFOs and tax leaders believe GenAI will significantly enhance efficiency and effectiveness, a substantial increase from 15% in 2023.

• 75% of respondents are still in the early stages of implementing GenAI.

GenAI is revolutionizing tax and finance functions by automating complex reporting processes, managing large datasets, and improving decision-making. Despite its potential, many companies are struggling to fully leverage the technology due to concerns over data security, regulatory compliance, and investment in high-quality data infrastructure.

KEY INSIGHTS ON GENAI USE:

• GenAI is being applied to:

• Automating indirect tax returns

• Improving payroll accuracy with smart chatbots

• Identifying tax deductions and credits

• Performing predictive analytics and horizon scanning

• Investment and Challenges:

• Significant investments are required to optimize GenAI, with businesses facing issues such as unreliable data, talent shortages, and privacy concerns.

II. REGULATORY AND REPORTING PRESSURES

Tax functions are under growing pressure to meet new regulatory and reporting demands, particularly as governments mandate real-time digital tax filings and introduce global minimum tax rules.

KEY CHALLENGES:

• Managing new regulatory requirements, such as real-time digital tax filings and e-invoicing, across nearly 100 countries.

• Complying with the OECD’s BEPS 2.0 framework, including the global minimum tax of 15%.

DATA AND TECH TRANSFORMATION NEEDED TO ADDRESS:

• Real-time digital filings: These are becoming mandatory in nearly 100 countries.

• Global minimum tax (Pillar Two): Large corporations must adjust their data processes to comply with new tax obligations, with 42% of organizations expecting significant adjustments.

III. TALENT SHORTAGES REACHING CRITICAL LEVELS

The shortage of skilled professionals is becoming a major concern, with 53% of tax and finance leaders struggling to attract talent, and 70% worried about the declining number of accountants entering the field. To address this, companies are increasingly turning to co-sourcing and diversifying talent sources.

• Notable Findings:

• • 62% of leaders consider employees without a university degree as an important source of talent.

  • 77% prioritize hiring data scientists to meet new demands in the field.

  • The talent shortage is pushing tax and finance functions to automate routine tasks, allowing employees to focus on more strategic responsibilities.

IV. COST PRESSURES: THE TOP CHALLENGE AND A BARRIER TO TRANSFORMATION

Cost pressures have become the biggest obstacle for tax and finance leaders, with 49% of respondents prioritizing effective budget management, and 86% seeking to reduce costs.

Cost reduction is now the primary challenge, as cumulative cost-cutting efforts and inflation continue to erode budgets. More than half (54%) of finance professionals are considering transforming their operating models, exploring options such as co-sourcing and automation to manage costs while maintaining efficiency.

THE PATH FORWARD

The 2024 EY Tax and Finance Operations Survey underscores the urgent need for tax and finance functions to transform in response to growing cost, regulatory, and talent pressures. While GenAI offers enormous potential to drive efficiency, companies must make thoughtful investments, embrace co-sourcing, and focus on upskilling talent to unlock its full benefits.

STRATEGIC RECOMMENDATIONS:

• Integrate GenAI to enhance efficiency and improve decision-making.

• Manage cost pressures by adopting automation and co-sourcing solutions.

• Address talent shortages by expanding recruitment strategies and developing in-house expertise in AI and data analytics.

As businesses navigate this transformative period, embracing new technologies, optimizing operations, and attracting the right talent will be crucial to long-term success.

SOURCE/ RECOMMENDED READ:

• 2024 EY TFO Survey | EY - Global