KPMG report: Disrupting tax processes with artificial intelligence technology

KPMG report: Disrupting tax processes with AI

Artificial intelligence (AI) is redefining the future of business and is substantially helping companies to deliver robust intelligent automation solutions. While AI—an area of computer science dealing with the simulation of intelligent behavior in a computer—is relevant to any business field, applying AI to tax processes is in its early stages.

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The coronavirus (COVID-19) pandemic has intensified the need for technological innovation as tax departments increasingly work remotely.

Application of AI to the development of benchmarking sets used for transfer pricing is a joint, multi-year effort of professionals involved in transfer pricing and data and analytics.

Traditional benchmarking is a very manual and time-consuming process, and also a process that can be highly subjective. AI can streamline this process while expanding the number of companies to be examined beyond what is practical for a human to handle, and in a more objective and consistent manner.

AI has the additional benefit of enabling analysts to move away from restrictive traditional processes and create benchmark sets that are based firmly and consistently on tested party attributes. By design, AI has the capability to identify more potential comparables than the traditional approach because it can give consideration to companies that fall outside the traditional search criteria—that is, the quantitative and qualitative screens that are necessary to restrict the set of potential comparables to a number that is practical for a person or team to review.

Tax departments, thus, can benefit from AI developments regarding benchmarking for transfer pricing and other aspects.


Read a September 2020 report* [PDF 105 KB] prepared by KPMG LLP

*This report was originally published by Bloomberg BNA and is provided with permission of the publisher.

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

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