Though we discuss primarily about accountancy, as London tax advisors today the topic will be something different. Today, we will discuss the approval of AI law by the EU which will have far-reaching implications.
European Union lawmakers have approved the world's inaugural comprehensive legislation on artificial intelligence, known as the Artificial Intelligence Act, after five years of initial introduction and numerous negotiations. Anticipated to be enforced later this year, these new regulations could serve as a blueprint for governments globally in crafting their own AI policies.
The essence of the AI Act revolves around assessing the potential risks posed by AI products or services to users. Correspondingly, the level of scrutiny and restrictions increases in tandem with the perceived risk level. For instance, AI tools like spam filters and content recommendation systems are likely to be categorized as low-risk, while applications in healthcare and critical infrastructure are poised to be labeled high-risk.
The legislation also addresses AI applications that are strictly forbidden due to their high-risk nature. Such applications encompass systems designed for social scoring, emotion recognition, biometric identification, and predictive policing. Breaches of this law may lead to fines amounting to as much as 7% of the offending company's worldwide revenue.
Moreover, creators of generative AI models will need to furnish comprehensive information regarding the text, video, image, and audio content origins utilized in training these AI models, all while adhering to the copyright laws of the EU. It will be mandatory to designate content that has been influenced by AI as such. Additionally, developers will be obligated to disclose any significant incidents related to their products.
These regulations are anticipated to catalyze the enforcement of similar regulations by governments globally. The Chinese government has introduced an AI governance proposal, while U.S. President Biden has already issued an executive order concerning AI, with several states in the process of formulating their own regulations. Many countries in Asia and South America have also initiated steps to establish AI protections.
The enactment of several provisions within the law is anticipated to occur in the forthcoming months subsequent to the endorsement by member states of the EU. It is anticipated that each EU nation will establish its own regulatory body for artificial intelligence. Moreover, additional legislative measures pertaining to AI are anticipated to be introduced in the following months and years, adjusting to the evolving landscape of AI applications.
As tax accountants in London, it is our duty to keep you informed about the latest information that can impact taxation. However, the immediate effect on this industry is still to be seen.
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