Artificial intelligence (AI) is here, not tomorrow but today. AI helps us ascertain, write, think, analyze, market, learn, and even consult. But like any good friend, there are limits.
Here are our 10 commandments concerning AI principles that people, businesses, and organizations should be aware of.
First, although AI seems smart and friendly, it is not a locked safe. Never share passwords. Don’t attach (without password protection) sensitive information, such as medical reports, client details, credit-card numbers, or paychecks.
Second, don’t attach private pictures of yourself, your children, employees, or clients. Pictures are biometric information. Once they are out there, there’s no real way of retracting them.
Third, you can use AI as an assistant, not as a brain replacement. AI is great for ideas, composing, brainstorming, and speeding things up. But responsibility, discretion, and decisions stay with us humans.
Fourth, don’t believe everything AI tells you. Even AI sometimes gets things wrong– sometimes quite confidently. Check, cross-check, and apply common sense. For example, if you ask something in a Google search, you generally receive an AI Overview with links to the sources used. Consider whether they are reputable sources and whether the AI Overview is a fair summary.
Fifth, set limits in your business or organization. Who is allowed to use AI? For what purposes? No AI rules can be a recipe for chaos.
Sixth, never use AI to fake or manipulate things. No stinging messages. It may be dangerous or illegal, and it may come back to hit you like a boomerang.
Remember, whatever you write could become AI source information, even innocent conversations, draft documents, and half-baked ideas. Think before you type.
Seventh, don’t let AI be your only source of information. AI is a tool, not an authority. It is also not a rabbi or bishop, nor a doctor, lawyer, or accountant. When considering important decisions, you should go to a professional.
Eighth, use AI intelligently; it can be a huge advantage. If you utilize AI properly, it can save time and money, help avoid mistakes, and give you a competitive edge. If you don’t, you are liable to fall behind.
Ninth, will AI soon be preparing and filing your tax return? Probably not. AI cannot understand what an assessing officer or tax official may be thinking. That involves a degree of game theory. What do you think they think you are thinking of? Tax officials tend to assume you are up to no good when you aren’t. How can AI know all this?
APPLYING THE relevant tax rules involves stringing together disparate rules across different laws, circulars, court cases, and tax treaties, as well as lengthy OECD commentaries. Using AI is like asking a five-year-old to study at a university.
By the time all this can be programmed into AI, things may have moved on.
Opposing views may well exist, but is it appropriate for AI to choose between them? Can AI spot an unintended loophole? And can AI distinguish tax avoidance (legal) from tax evasion (illegal)? Not yet, in our view. AI is like an adviser, but you make the final decision.
In business, it is common to use a team of advisers for important tax and other issues, e.g., lawyers, accountants, and financial advisers.
Tenth, what about international tax? Here, things get even tougher for AI. In the case of international businesses and investors, it is necessary to check the interaction between different complex national tax systems – corporate and personal – plus tax treaties and OECD pronouncements. This generally necessitates human supervision. AI may be a useful starting point, but human advisers in each country should agree on the combined outcome.
Generally, in international tax projects, one firm coordinates advice from each country concerned – i.e., “invisible time.” Check whether the international tax coordinator has a good enough head on his or her shoulders to coordinate the AI and human advisers used.
Don’t entrust your fate to AI
Comment: There are a number of smart tax-return packages on the market. We looked at several and found issues.
For example, one had trouble handling foreign tax credits. Another says openly it cannot handle foreign residents and makes no mention of business bookkeeping or invoicing regulations.
To sum up: AI is a smart colleague, but it doesn’t know everything. True intelligence is knowing when to use AI and where to stop.
As always, consult experienced technical and tax advisers in each country at an early stage in specific cases.
ariel@m-challenge.com; leon@hcat.co
Ariel Marom is an IT specialist and founder of M-Challenge, a computer- and cloud-services firm based in Tel Aviv.
Leon Harris is a certified public accountant and tax specialist at Harris Consulting & Tax Ltd.