VATupdate Newsletter Week 03 2025

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ARTIFICIAL

The VATupdate Team is experimenting with artificial intelligence (AI). When it comes to AI, we often imagine a world of limitless possibilities. From autonomous vehicles to creative pursuits like generating ice cream flavours or paint names, AI’s potential feels boundless—until it doesn’t. Sometimes, AI can produce results that are more comical than useful (Pumpkin Trash ice cream, anyone?). But these quirks don’t just provide laughs—they also hold valuable lessons for industries far removed from dessert experimentation, including the world of VAT.

Much like crafting an AI to generate delicious ice cream flavours, implementing AI for VAT compliance and administration isn’t as straightforward as pressing “run” on an algorithm. Tax authorities and businesses alike are increasingly exploring AI to manage VAT complexities, from detecting fraud to streamlining filings. However, just as AI might “optimize” robot design by somersaulting awkwardly across a course, VAT-focused AI systems can also veer into unexpected territory.

Take, for example, AI-driven systems designed to identify fraudulent VAT invoices. If trained on biased or incomplete data, such systems could flag legitimate invoices while letting suspicious ones slip through. Just as an AI mistook human fingers for a fish, VAT AI might misinterpret patterns in transactional data, leading to costly audits or overlooked risks.

AI often does exactly what it’s asked to do, but not necessarily what’s needed. In VAT, this can be a dangerous game. Imagine a business training AI to minimize VAT liability without considering compliance. The AI, working with its “worm brain” logic, might suggest solutions that technically reduce VAT obligations but create legal exposure.

Today’s AI is not the all-knowing entity of sci-fi—it’s a tool that relies heavily on how we frame its tasks and the data we provide. The same applies to VAT. For AI to be truly useful in VAT management, it must have clear objectives, robust training data, and ongoing monitoring. Despite the quirks and challenges, the potential for AI in VAT is enormous. Imagine AI helping with real-time compliance, fraud detection, and predictive analysis.

The takeaway for VAT professionals? Approach AI with curiosity and caution. Like the strange world of AI-generated paint colours, where “Sindis Poop” became a suggestion, VAT AI can surprise you—sometimes in unhelpful ways. But with the right data, clear objectives, and vigilant oversight, AI can be a powerful ally in navigating VAT’s complexities.

At VATupdate, we haven’t discovered new ice cream flavours yet—unless VAT-flavoured counts, in which case we might have eaten it all! Or maybe you’ll find traces of it on our website… Be sure to check www.vatupdate.com daily for your dose of VAT insights!

If you have any comments, questions, or ideas that you want to share with us, please send us an email at [email protected] or leave a comment under the posts of this newsletter on LinkedIn.

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