Experts highlights Role of AI in Enhancing Tax Compliance, Financial Regulation

Tosin Clegg

An expert in the field of taxation law, by name Joseph Kuba Nembe, with proposed endeavor in the field of Taxation Compliance is seeking to leverage his expertise in tax law, acquired through a Master’s degree in Tax Law and over eight years of professional experience in taxation consulting, to enhance the global tax compliance and tax information reporting processes.

This initiative he noted, aims to provide the governments with a clear line of sight into the domestic and offshore financial activities of individuals and businesses across countries, which in turn serves as a potent tool to prevent tax evasion and illicit financial practices.

In today’s rapidly evolving financial landscape, the integration of artificial intelligence (AI) into tax compliance and financial regulation is becoming increasingly vital. Nembe, a Tax Consultant at Deloitte, explores the transformative potential of AI in enhancing the efficiency and effectiveness of tax systems.

AI technologies offer unprecedented capabilities for automating complex tax compliance tasks. By leveraging machine learning algorithms, tax authorities can process vast amounts of financial data quickly and accurately.

This automation not only reduces the administrative burden on tax professionals but also minimizes the risk of human error, ensuring more accurate tax reporting.

One of the significant advantages of AI in tax compliance is its ability to detect patterns indicative of tax evasion. By analyzing historical tax data, AI systems can identify anomalies and flag suspicious transactions for further investigation.

Nembe’s work involves developing these AI-driven systems to enhance the capability of tax authorities to combat tax evasion proactively.

Predictive analytics is another area where AI can significantly impact tax compliance. By predicting potential compliance risks based on historical data and current trends, tax authorities can allocate resources more effectively and take preventive measures to mitigate risks.

Nembe emphasised the importance of incorporating predictive analytics into tax compliance strategies to stay ahead of emerging challenges.

The integration of AI into tax systems also facilitates real-time monitoring of financial activities. Traditional tax reporting often relies on periodic submissions, which can result in delays in identifying compliance issues.

He observed that AI enables continuous monitoring and instant analysis, providing tax authorities with up-to-date information and enabling prompt action when necessary.

However, the adoption of AI in tax compliance also raises several legal and ethical considerations. Nembe highlights the importance of developing robust regulatory frameworks that ensure the ethical use of AI technologies.

These frameworks should address issues such as data privacy, algorithmic transparency, and accountability to build public trust in AI-driven tax systems.

The potential of AI extends beyond tax compliance to broader financial regulation. By automating regulatory reporting and compliance checks, AI can streamline the regulatory process and reduce the burden on financial institutions.

Nembe advocates for the integration of AI across various regulatory domains to enhance overall financial stability and compliance.

Nembe’s research also explores the impact of AI on the professional landscape of taxation. As AI systems take over routine tasks, the role of tax professionals will evolve towards more strategic and analytical functions.

Nembe stresses the need for continuous education and training to equip tax professionals with the skills required to thrive in an AI-enhanced environment.

However, he pointed out that the collaboration between public and private sectors is crucial for the successful implementation of AI in tax compliance.

He also called for partnerships between tax authorities, technology companies, and financial institutions to develop and deploy AI solutions that meet the specific needs of tax systems.

Such collaborations, in his view, can drive innovation and ensure the effective integration of AI technologies.