Genesis of tax administration tools for "whitewashing the economy"

Shemyakina Marina Sergeevna ORCID: 0000-0003-3515-2680 PhD in Economics Associate Professor, Department of Accounting, Taxes and Economic Security, Volga State Technological University 424000, Russia, Yoshkar-Ola, Lenin Square, 3 sh.marina.s@gmail.com Other publications by this author

Introduction

The public declaration of the goals and objectives of the Federal Tax Service defines the following result of activity: "development of risk analysis tools and remote automated control aimed at voluntary fulfillment of obligations by taxpayers in full", which is achieved, among other things, through the development of methods to encourage taxpayers to voluntarily fulfill tax obligations in full ^[1].. At the same time, the implementation of this task is possible if a compromise is found between the state and business to establish a standard of the tax burden in the industry, in which all participants evaluate themselves and counterparties from the point of view of good faith. In this regard, the study of existing tax administration tools that make it possible to find such a compromise, as well as the development and application of new ones, is an urgent task of public administration and the scientific community.

Literature review

The term "whitewashing" is not used in foreign works, mainly researchers consider this process from the perspective of managing the behavior of taxpayers.

The determinants of tax discipline from the perspective of the theory of planned behavior and stakeholder theory perspective are considered in the work of Andi Nurwanah, T. Sutrisno, Rosidi Rosidi, Roekhudin Roekhudin. ^[2]. It is impossible not to agree with Mangoting Y., Tangkelobo H., Sina W. L., who believe that the model of relations between the state and taxpayers should be based on the principles of transparency, ethics and trust ^[3]. Of interest is the study of Kasipillai J. and Abdul-Jabbar H. ^[4], which is based on the hypothesis of the existence of gender and ethnic differences in the behavior of taxpayers. Tax compliance, as taxpayers' compliance with legal norms, is also the subject of many publications from the perspective of social norms ^[5], fiscal incentives ^[6], aggressiveness of tax control ^[7], digitalization ^[8].

Russian scientific research on tax administration in the last few years has been mainly devoted to the problems of digital transformation, as well as the use of tax tools to achieve sustainable development goals. Insufficient attention has been paid to the implementation of sectoral projects of the Federal Tax Service. The works of Bunina A.Yu. ^[9], Pavlyuchenko T.N. ^[10] reflect the problems of tax control in the grain market. The analysis of the current state of the cleaning services market in the Russian Federation was carried out in the works of E.V. Vyaznov ^[11], M.V. Belyanina ^[12]. Special attention is paid to tax clauses as an instrument of convergence of private and public legal regulation ^{[13,14,15,16]}. Labeling of goods as one of the elements of the model of interaction between taxpayers and tax authorities is considered in the works of Izotov A.V. ^[17] and Deeva T.V. ^[18].

The lack of comprehensive work led to the formulation of the purpose of this study–to develop theoretical provisions regarding the analysis of the historical development of tax administration tools for "whitewashing the economy".

Results

Let's consider the evolution of tax administration tools for the "whitewashing" of economic sectors and individual objects (presented in Table 1).

Table 1 – Evolution of tax administration tools for the "whitewashing" of economic sectors and individual objects (legalization of the latent tax base)

Source: compiled by the author, the objects of regulation and technologies are given based on the analysis of official site messages https://www.nalog.gov.ru from 2013 to 2023 .

Encouraging taxpayers to voluntarily pay tax obligations is carried out, among other things, through the implementation of industry projects of the Federal Tax Service, developed within the framework of the concept of the taxpayer behavior management system. For the first time this concept was presented at a seminar in Irkutsk by Daniil Egorov in October 2014 ^[20] (Figure 1). Its essence lies in the selection of regulatory objects with a high degree of risk, then there is a selection of systemic methods of tax evasion, after which a dialogue with business is built: an offer to voluntarily pay taxes or conduct an on-site tax audit. In both cases, the consequence is the replenishment of tax revenues of budgets. The approbation of this concept took place in the market of household appliances and electronics. The tax authority revealed a scheme for importing products by a large distributor through a network of small firms, while the budget did not receive a large amount of income from VAT and customs duty (additional charges amounted to 1 billion rubles ^[21]. The result of the dialogue with business was the signing in April 2015 by the 10 largest representatives of the market of the "Charter on the transition to transparent schemes for importing electronics to Russia".

Figure 1. The concept of tax control based on the management of taxpayers' behavior

Source: compiled on the basis of ^[22]

In October 2015, the first results of the introduction of a new approach to control and supervisory activities appeared - the growth of taxes in January–August 2015 in real terms exceeded the growth of the economy ^[23]. Two factors influenced this. A change in legislation regarding the inclusion of information from the purchase book and the sales book in the VAT tax return from January 1, 2015, which allowed the tax authorities to generate Big Data. When applying analytical tools to this data, it became possible to track VAT transactions. To implement this task, the second version of the VAT ASK was put into operation in 2015 (the first version has been functioning since 2013), and in 2016 – the SUR of the VAT ASK 2, with the help of which a risk-oriented approach is carried out in assessing VAT taxpayers based on subject analysis and analysis of transactions. It is the analysis of the found VAT tax gaps that can be considered a determinant in the choice of the industry to be "whitewashed".

The use of automated control systems, such as the VAT control System, the KKT control system, the introduction of mandatory labeling of goods can be considered the beginning of a new stage in the fight against the shadow sector – the period of introduction of new digital technologies that allow to identify the latent tax base.

ASK KKT allows tax authorities to carry out, among other things, remote checks and is a database of all receipts generated by cash registers.

Another important stage in the development of control tools is the introduction into commercial operation of an automated personal income control system (ASK DFL). The capabilities of the system are shown in Figure 2. The use of this system allows us to apply a new approach to identifying salary payments "in envelopes" – search for tax gaps in personal income tax and insurance premiums, conduct better modeling of the consequences of changes in legislation, and this system is a personalized database for individuals. If the system is integrated with data from other databases, it will be able to compare the income of individuals with their expenses. However, this action has not yet been implemented, as its implementation requires discussion, including at the level of taxpayers.

Figure 2. Capabilities of ASK DFL

Source: compiled by the author according to the Report of the Head of the Department of Taxation of Personal Income and Administration of Insurance Premiums of the Federal Tax Service of Russia for the Yamalo-Nenets Autonomous Okrug Rodina N.V. ^[24]

Among the innovations that reduce the burden of the taxpayer, it should also be noted the automated simplified taxation system, which is being tested from July 1, 2022 in four subjects of the Russian Federation. The tax authority undertakes all calculations for paying taxes and filling out reports (with the exception of the EFS-1), in addition, payers, including individual entrepreneurs, will be exempt from paying insurance premiums, with the exception of injury contributions (in 2023 – 2217 rubles). Despite the fact that this special tax regime is most advantageous to apply only to certain categories of taxpayers (for example, sole proprietors without employees or LLC/Sole proprietors with high wages, for which higher rates of insurance premiums are applied in other taxation regimes when calculating insurance premiums), it is assumed that its implementation will help reduce the amount of wages "in envelopes" due to almost 0 rates on insurance premiums.

Labeling of goods is a process associated with the identification of each unit of goods and tracing its path from the manufacturer to the buyer. This tool allows you to combat counterfeit products. The results of the project in the first year of labeling fur coats and fur products showed "an 8-fold increase in the turnover of goods and an increase in the number of legalized market participants by 25%" ^[25].

In our opinion, the next key stage in the process of "whitewashing" can be considered the introduction of the institute of the self-employed and its possible use throughout the country from July 2020. The results are presented in Figure 1 and indicate an upward trend in the number of registered persons applying the special tax regime "professional income tax".

Figure 3. The number of registered self-employed, people in Russia as a whole

Source: compiled by the author according to official website data https://rmsp.nalog.ru/statistics2.html

In February 2021, the Federal Tax Service of Russia for the Largest Taxpayers No. 10 was established, which carries out tax administration of the largest taxpayers - individuals. The results of her work are high–profile cases related to the fragmentation of business at the beginning of 2023, which were widely sanctified in the media in view of the publicity of the defendants in these cases.

The transition from continuous inspections to the need to control and regulate the activities of entire industries is associated with the implementation of "industry projects". All industry projects are based on three principles: the principle of creating a transparent control environment in industries and markets, the principle of guaranteeing security from unfair competition; the principle of mutual trust between the tax authority and taxpayers and openness to dialogue. These principles are also reflected in the Manifesto of the Federal Tax Service of Russia, presented at the expanded board on May 30, 2022. The algorithm for implementing and developing an industry project of the Federal Tax Service of Russia is shown in Figure 4.

Figure 4. Algorithm for the development and implementation of an industry project of the Federal Tax Service of Russia

Source: compiled by the author

At the first stage, environmental monitoring is carried out, which consists in analyzing the activities of taxpayers in a certain industry. Next comes the scoring of the industry. The indicators for which benchmarks will be calculated are selected. A benchmark is a benchmark for calculating deviations. At the second stage, the objects of control are determined. Based on the deviations, the IDO (due diligence index) is determined and all taxpayers are divided into three zones: green, yellow and red – depending on the deviation from the standard (for example, for the industry's facilitation, getting into the yellow zone occurs when the indicator deviates from the benchmark from 0 to 20%, more than 20% is the red zone). Thus, a register of taxpayers of a certain industry is created. At the third stage, the objectives of the industry project and the "roadmap" of the stages of its implementation are being developed. The fourth stage is the direct implementation of the developed project and includes an information company (interaction with the media, booklets, an information company on the official website of the Federal Tax Service), meetings with taxpayers (including at commissions on the legalization of the tax base), various kinds of prevention of tax offenses. The work of the tax authorities is aimed at popularizing the introduction of tax clauses in contracts, signing charters by taxpayers and voluntary payment of taxes to the budget system. At the fifth stage, the results of the work done are evaluated, repeated analysis and control of the business environment is carried out.

Up-to-date information on the implementation of the Federal Tax Service of industry projects is contained on the electronic resource https://радо.рус . The structure of the information resource is shown in Figure 5.

Figure 5. Resources containing open information about the level of tax discipline in terms of VAT, availability of labor and material resources

Source: compiled on the basis of ^[26]

At the moment, the Federal Tax Service is implementing two main industry projects: "Markets" and "Public Catering". In addition, there is an industry project "roadside service" in the Moscow Region, and "whitewashing the passenger transportation market" in the Perm Region.

According to the results of the assessment of the activities of the Federal Tax Service of Russia in the Perm Region for 2022, 92 people were employed as part of the project to whitewash the passenger transportation market, and the average salary increased by 28% ^[27]. For other industry projects, in Russia as a whole, there is also an increase in kkt revenue.

The next industry that came under the attention of the Federal Tax Service will be transport. This conclusion was made by us on the basis of the speech of the deputy head of the Control Department of the Federal Tax Service Varvara Burlevich ^[28] at the forum "Logistics. The New Present" in November 2022, The factors - grounds for regulating the control of the industry are:

– a large number of participants (over 41,000 companies);

– unfair competition in the transport services market;

– VAT gaps;

– problems with the calculation of personal income tax and insurance premiums.

Despite the fact that the project has not yet been officially approved and its implementation has not begun, the Federal Tax Service suggests using standard tools to whitewash the industry:

– use of a tax clause in contracts with counterparties;

– creation of the transport industry committee

– scoring system of the market (risk analysis of companies doing business, division of companies according to the principle of "traffic lights")

– creation of an association of conscientious taxpayers.

Such measures will affect the market as a whole. Firstly, there will be a revision of the pricing policy, and secondly, the legalization of part of the tax base.

The analysis of the activities of tax authorities makes it possible to identify the tools of tax administration for the "whitewashing" of economic sectors and individual objects – the legalization of the latent tax base, which is resources intentionally withdrawn by the taxpayer from taxation and not included in the calculation of tax ^[29] (shown in Figure 6). All instruments are classified by us into 4 groups:

– introduction of innovative technology to improve the quality of tax administration;

– regulation of industries and markets;

– strengthening of tax control over subjects- individuals;

– identification of "mass" tax avoidance schemes.

Figure 6. Tax administration tools for "whitewashing" economic sectors and individual objects

Source: compiled by the author

Thus, the tools of tax administration for the "whitewashing" of economic sectors and individual objects are understood as such methods and methods that make it possible to transform the latent tax base into tax revenues of the budget.

It should be noted that the use of all tools together will improve the quality of tax administration, create a transparent tax environment, fair competition for business, increase tax revenues of the budget system and tax security of public legal entities.

Conclusion

The scientific novelty of the conducted research lies in the development of theoretical provisions regarding the analysis of the historical development of tax administration tools for "whitewashing the economy". The definition of the concept of tax administration tools for the "whitewashing" of economic sectors and individual objects is given; the author's classification of tax administration tools for the "whitewashing" of economic sectors and individual objects is given, which are divided into 4 groups: the introduction of innovative technology to improve the quality of tax administration; regulation of industries and markets; strengthening tax control over natural entities individuals; identification of "mass" tax avoidance schemes. The evolution of tax administration tools for the "whitewashing" of economic sectors and individual objects is considered, according to the content of the tools used, classification into five stages of development is made.

It seems that the material of this article will become the basis for a very serious study– the search for an industry that could become the next project of the Federal Tax Service.

^[1] https://www.nalog.gov.ru/rn77/news/smi/5433207/