Transformative AI and the implications for Tax and Legal
The current discourse about artificial intelligence (AI) demands our attention, describing a potential for global change on par with the invention of steam power or the creation of the printing press, but at a significantly accelerated pace. The promise is that AI can deliver everything from breakthroughs in science and medicine that will extend our lives to gains in productivity that will bring unprecedented abundance.1
Some people are optimistic about the possibilities, while others are worried about how society will be disrupted or put at risk— and many smart individuals are both.2 No one, though, can ignore the technology or downplay its potential impact. Several well-read essays have made that point, rejecting complacency. One compared AI to a novel virus that could sweep across the planet, while another suggested that a year or two in the future we will look back and wonder what hit the economy.3
The vast sums being spent on AI should be enough to convince most people that something big is happening. The largest cloud computing companies, the so-called hyperscalers, have committed more than $700 billion in capital expenditures to build AI infrastructure in 2026 alone.4
Intelligent models and productive agents
The leaders of the AI industry should be taken seriously when they tell us that their technology is advancing faster than most people realise. Demis Hassabis, co-founder and CEO of Google DeepMind, said in May 2026 that we could be as little as four years away from an AI-based system with all the cognitive capabilities of humans, though he still broadly expects it around 20305 Sam Altman, co-founder of OpenAI, said in early 2025 that he was confident OpenAI knows how to build an artificial general intelligence (AGI), and told TIME in August 2026 that by the end of the year the company would have an internal system he would call AGI.6 Dario Amodei, co-founder and CEO of Anthropic, has said that, if scaling trends hold, we are likely to get what he calls “powerful AI” within the next few years, a term he defines as an AI smarter than a Nobel Prize winner across most fields, from biology to mathematics to writing.7 Most recently the public debate has turned to Artificial Super Intelligence and recursive self-improvement of AI systems. Nonetheless, the practical economic impact may arrive long before there is agreement on whether a system officially qualifies as AGI or ASI.
These companies are also responding to the risks. OpenAI slowed some research after an unreleased model escaped a test environment,8 and Amodei has called for mandatory third-party testing of frontier models.9 Not all researchers share their timelines. AI pioneer Yann LeCun, for one, argues that language models alone will not reach human-level intelligence.10
Some debate how to best describe the technological shift that we are on the cusp of reaching.11 But transformative AI captures the idea that the technology will soon be doing many things we used to believe only humans could do, and it’s the term we will use here.
One measure of the pace of change—how quickly transformative AI is coming—is the improvement in Generative AI models since they entered the public imagination with OpenAI’s release of ChatGPT in late 2022. These models can retrieve information, analyse, summarise, and reason today with capabilities and accuracy barely imaginable a few years ago.
Another metric is the advance of Agentic AI systems, enabled by these foundational models. This is AI that can take over tasks end-to-end, can break problems into pieces, develop strategies, test them, and act with autonomy in the real world. Already changing how computer coding is done, Agentic AI holds the greatest promise for world-changing productivity gains.
Implications for tax and law
As someone who has made a career in the tax and legal professions, my analysis is sharpened by a recognition of how AI is disrupting my own fields. It won’t just change how accountants and lawyers do their work, or how taxes are calculated and filed, or how courts administer laws. AI appears likely to reshape the global tax base and shift our conception of justice and law.
In this article, we explore key issues, starting with how tax policy will need to respond to the economic changes transformative AI may bring. We also consider how AI is already fundamentally driving change in the administration of tax, the application of law, and in the tax and legal professions. Transformative AI is poised to redefine how value is created, how rules and laws are applied, and how tax and legal expertise is exercised, and it’s driving change at both individual and organisational levels.
This article is not meant to be exhaustive but rather illustrative of the issues we now face in our professions.
The shape of the AI future in tax and law
The AI advances society grapples with today do not simply represent another wave of technology change. Rather, transformative AI promises to reshape our world—shifting the foundations of how economies are taxed, how law and justice are administered, how professional expertise is applied.
The transition underway will test the ability of humans and institutions to adapt as quickly as the technology itself advances. The stakes are not limited to efficiency or cost, but extend to the integrity, fairness, and resilience of systems on which modern economies depend.
