AI has undoubtedly changed industries, how business is conducted, investment strategies, and hiring processes. Moreover, the meteoric rise of AI brought both a promise and a threat that machines will replace humans, given their far superior processing and analytical capabilities.

As a result, companies rushed to integrate generative AI into software development, customer support, data processing, and internal operations, often presenting AI as a direct replacement for large portions of the workforce. It is estimated that in 2026, tech companies laid off nearly 123,000 workers, with AI cited as one of the leading reasons. Yet the latest data show that two out of three companies that made AI-driven cuts are already rehiring. This raises an important question: how does all of the AI hype affect tax professionals?

The Rush Toward AI-Driven Cost Cutting

OpenAI, Anthropic, and Google promoted their AI tools ChatGPT, Claude, and Gemini as a way to transform work by automating routine tasks and allowing people to focus on more complex responsibilities. 

Executives were further incentivized to lay off workers and integrate generative AI into all parts of their companies for two specific reasons. The first was the promise of agentic AI, systems capable of carrying out tasks independently, potentially automating entire jobs rather than merely assisting with them. The second was investor pressure: markets consistently rewarded businesses that publicly embraced AI transformation.

Essentially, the integration of AI in day-to-day operations was supposed to reduce costs and increase productivity. Something that nearly every company in the world wants. However, the assumption that AI was mature enough to automate large portions of white-collar work with minimal disruption proved premature. This resulted in a gap between AI demonstrations and real-world implementation.

The Reality and the Rise of “AI Regret”

Despite widespread announcements of AI-driven layoffs, primarily in the tech sector, recent reports indicate that a significant share of companies have already rehired workers or expressed regret over their decisions. The most striking example is Klarna, a fintech and digital banking company. 

Klarna was quick to lay off 700 workers, pause hiring, and was confident that AI chatbots could fully replace its support agents. While the move initially contributed to cost savings and operational efficiency, the outcome was a measurable decline in service quality and the eventual rehiring of staff.

In addition to lower service quality, another significant factor many companies overlooked was the computing costs. The IBM study shows that, as computing costs, including hardware, data centers, networking, and energy, have risen, so has the number of AI projects that were put on hold or failed to scale.

While the layoffs may have resulted in immediate salary cost savings, the key questions of how much it costs to train the AI to complete certain tasks and how many tasks and jobs the AI can actually replace remain. And the distinction between what AI can actually do and where workers' experience comes in first place is particularly important in highly regulated fields such as tax.

Why Tax Professionals Are Harder to Replace

On the surface, the tax work appears to involve only processing numbers and completing forms. However, it is more than that. Tax professionals regularly interpret complex legislation, apply judgment to ambiguous situations, evaluate risk, and communicate with Tax Authorities and clients.

The thing with regulations is that they change constantly. Even in a well-connected world where data is widely available, identifying the latest legislative changes, and more importantly, interpreting them correctly, requires understanding business context, commercial intent, and evolving legal standards. In other words, many factors affect how tax rules will be implemented in practice. AI is not capable of independently assuming legal responsibility for advice or accurately evaluating every factual nuance in a transaction.

One of the biggest criticisms of AI is the so-called “hallucination problem”. AI may “hallucinate” and may overconfidently offer incorrect information. OpenAI itself has acknowledged that hallucinations in large language models are mathematically inevitable. Moreover, the company, an industry leader, reported that AI will deliberately lie to tell users what they want to hear. A responsible, experienced tax professional would never do this on purpose.

Importantly, in the modern business environment, tax professionals are no longer just there to fill in forms and do the calculations. Instead, they are increasingly serving as strategic advisors rather than purely compliance-focused specialists. And because both corporate leadership and government agencies, including Tax Authorities, are staffed by humans, tax professionals retain a decisive advantage in communication, negotiation, and business judgment that current AI systems cannot fully replicate.

Final Thoughts

Will AI reshape indirect tax systems and regimes, and how tax professionals do their work? Absolutely. Things have already changed and will further change. Some roles will be replaced with AI; others will heavily rely on AI assistance. But the recent wave of rehiring across the tech sector, the industry most disrupted by AI, is a clear signal that the technology is not the wholesale replacement it was positioned to be.

AI is a powerful tool. In the hands of a skilled tax professional, it can drive real efficiency gains. But it is not a substitute for human judgment, legal accountability, or professional trust. The firms that will thrive are those that treat AI as leverage for their tax professionals, not a replacement for them.