The need and prerequisites for conducting an unaccountable form of VAT calculation

Palamarchuk Oleg Olegovich Leading Expert Specialist, Federal Tax Service 23 Neglinnaya str., Moscow, 127321, Russia olegpalalamar17@yandex.ru Other publications by this author

Introduction

Currently, taxpayers of VAT and other taxes are required to keep tax records, which distracts them from their main function – running a business aimed at maximizing profits and capitalization. However, due to current legislation, businesses need to maintain a staff of accountants who form such reports; lawyers who provide methodological support for the correctness of reporting; programmers who technically provide the company with specialized software. Scientific circles also drew attention to the negative impact of the difficulty of calculating taxes in relation to doing business, for example, Koroleva L. Yu. in her work "On the impact of VAT on the macroeconomic parameters of the Russian economy" and Matvienko O.N. in her scientific article "The impact of value added tax administration on the development of the Russian economy".

Arguments against the practical application of the proposed concept

The issue of the need for unaccountable calculation of taxes is further aggravated by the inability to cancel the obligation of business to maintain accounting records and submit accounting reports. This accounting largely corresponds to tax accounting, corporate income tax, which is not considered in this article. Therefore, by canceling the reporting on value added tax, the business will not receive proper simplification, since the obligation to maintain tax records for corporate income tax in a simplified taxation system, as well as accounting, will remain. However, the automation of value added tax, which implies the transition to electronic document management, will be an initial step towards automating tax accounting for other taxes, and will also simplify accounting in terms of reflecting income and expenses. However, these issues are beyond the scope of this work.

At the same time, tax legislation is rapidly being supplemented with new norms establishing rules, procedures, mechanisms, which complicates the procedure for calculating taxes and their administration, raises many methodological issues on which the right decision is not always made. Consequently, automation of tax accounting and reporting also saves businesses from following large arrays of legislative norms.

However, companies conduct financial, managerial and other analysis for their own purposes, which is an argument against changing the current concept, since the business will continue to keep records, but for its own purposes.

In addition, VAT is one of the main sources of income to the federal budget and the consolidated budget as a whole, which increases the risk of introducing a new concept of unaccountable VAT calculation: in the case of incorrect VAT calculation by the tax authority, which may occur for a number of reasons listed below, the budget may lose significant revenues. This fact is confirmed by Table 1, which shows that VAT has a large share in state revenues ^[21].

Justification of the need for the practical application of an unaccountable form of VAT calculation

Despite the presence of theses that impede the practical application of the proposed concept, they are offset by the potential possibility of introducing an unaccountable form of calculation for other taxes, as well as the partial abolition of accounting. In addition, careful consideration of every detail in the calculation of the tax will minimize the mentioned risks associated with the receipt of income to the budget for this tax.

The need for digital transformation is reflected in a variety of scientific papers, including dissertations. For example, in the dissertation for the degree of Candidate of Economic Sciences "Improvement of the VAT tax administration system in the Russian Federation", V. A. Stroiteleva proposed the concept of introducing digital VAT administration. And although the concept proposed in the work relates to a slightly different topic, it confirms the need to revise the current VAT calculation mechanism.

The need to digitalize tax administration in general, that is, not only administration, but also declaration, is being paid attention not only by public authorities, but also by many scientists. So, Doctor of Economics S. G. Sinelnikov-Murylev, Candidate of Economics N. S. Milogolov and Candidate of Economics A. Y. Bergerov in a scientific article in 2022 "Digitalization of tax administration in Russia: opportunities and risks" ^[3] saw technological progress and introduced tax monitoring as the first prerequisites for the introduction of automated tax calculation the stage of digitalization of tax administration. Scientists have also drawn attention to the complexity of tax legislation to such an extent that a large number of value judgments are required for every detail of taxation: what is taxed and what is not, what falls under the benefit and what is not: "... the design of the tax system should be simplified so that the algorithmization of tax calculation becomes possible, in other words, so that the procedure for calculating taxes becomes possible without the use of numerous types of value judgments and various interpretations of tax legislation.

Today, the Tax Code of Russia does not represent a closed legal system, the provisions of which are interpreted unambiguously and without reference to other sources of law. It should also be pointed out that judicial authorities often make decisions that radically change judicial arbitration practice due to a change in the view of resolving a legal contradiction. This, in particular, can be observed in the analysis of judicial practice in cases related to the determination of the actual recipient of income, the specifics of calculating "excess" interest, etc. Taking into account the fact that procedural legislation requires judges to be guided not only by the norms of law, but also by a number of socio-evaluative and value criteria when evaluating evidence, simplifying tax legislation in such conditions is an extremely difficult task."

In general, the prerequisites for the transition to a new VAT calculation mechanism are the following attributes:

· the technical possibility to introduce a new automated tax calculation procedure. So, currently taxpayers keep tax records in specialized software such as 1C. An enterprise" that provides largely automated accounting. However, due to the difficult methodology of the value added tax, it is not possible to introduce fully automated accounting. In this regard, in the case of amendments to the tax legislation regarding the calculation of personal income, simplifying it, it will be possible to introduce an exclusively automated calculation. Currently, it is possible to introduce only partial automation ^[1];

· the desire of the state for such automation. At this stage, this manifests itself in other taxes ^[12], but in the future it may extend to VAT. Thus, in 2019, the obligation to submit declarations on transport and land taxes was abolished for legal entities ^[12]. And since 2023, the obligation for organizations to submit declarations on objects, the tax base for which is determined as cadastral value, has been abolished. However, this does not cancel the obligation to submit advance reports on such taxes (for this it is necessary to independently request information on the cadastral value of their objects from the Unified State Register of Real Estate and calculate the advance payment) ^[12]. Thus, the state is taking action on the abolition of tax reporting, but currently the results are insignificant.

· the business strives to minimize costs and to maximize the release from any unnecessary actions. One of these actions is the process of calculating taxes (both VAT and other taxes), accounting. And although the business carries out accounting, it is designed for internal needs, and exemption from official rules on which to keep records, maintain software and employees will lead to a reduction in responsibilities.

· the functions of the tax, first of all, include replenishment of the state budget, and secondly, stimulating the economy through benefits and reduced tax rates. Taxes are imposed to perform these functions, not to complicate processes. However, the current procedure for calculating VAT is a complex process with many features and ambiguities.

Subtleties in the calculation of VAT, complicating the practical application of the proposed concept

For a more detailed study of the need to simplify the procedure for calculating VAT, its main features should be considered, as a result of which confirmation of the complexity of the mechanism of its administration will be obtained. One of the features is its payment not from the amount of income, as for corporate income tax, personal income tax, but in addition to this income. The tax itself is calculated not from income, but from sales, that is, it is not income that is taxed, but sale.

The procedure for calculating this tax causes significant difficulties caused by a large number of norms, the wording of each of which may not correspond to each other, which complicates the understanding of the calculation procedure as a whole (each norm affecting the tax is closely interrelated with another norm, but the lack of uniform formulations makes it difficult to understand). For example, the last paragraph of paragraph 4 of Article 170 of the Code provides for the possibility of

Another feature is the voluminous text without the content of specifics. For example, subparagraph 4 of paragraph 1 of Article 148 of the Tax Code states that the place of sale in Russia is the provision of "design, pre-design and other similar services." However, such a wording exists only in the code, and in the classifier of the type of work there is the wording "design and survey work", which does not allow us to unambiguously determine whether the works specified in subparagraph 4 of paragraph 1 of Article 148 relate to design and survey work.

The proof of this fact is the presence of many letters issued by the Ministry of Finance of Russia, the Federal Tax Service of Russia, explanations issued by the legal reference systems Consultant-Plus, Garant and others. Taxpayers en masse apply to the tax authorities with explanations. In addition, the current legislation contains many subtleties that make it difficult to apply it in unaccountable VAT. For example, paragraph 2 of Article 146 and paragraphs 1-3 of Article 149 of the Tax Code provide for transactions that are not taxable (legally they are divided into transactions that are not subject to taxation and transactions that are not subject to taxation, but in fact they have one essence – they are not taxed), but some of them are exempt from tax the other is voluntary (paragraph 3 of Article 949 of the Code), which makes it impossible for the tax authority to calculate the tax independently, since this right is exercised by the taxpayer at its discretion. Another feature is the taxation of services provided in electronic form, the list of which, although specified in the Tax Code, is written in such a form that it is unclear which operations fit such a list and which do not ^[5]. Another difficulty on the way to transferring the tax calculation function to the tax authority is separate accounting. It is conducted in the case when a taxpayer carries out transactions that are taxable and not taxable. It is not possible for the tax authority to independently determine which of each of its transactions belongs to one type or another. As a result, the tax authority cannot determine which amounts of "incoming" VAT are deductible and which are not. Moreover, tax deductions are a taxpayer's right, not an obligation, which also prevents the tax authority from calculating the tax since it cannot independently accept the amounts of "incoming" VAT for deduction.

The solution to these problems is possible by replacing the right to tax benefits and deductions with an obligation: all transactions (objects) named in paragraph 2 of Article 146 and paragraphs 1-3 of Article 149 of the Code will be exempt from taxation without fail, and all amounts of "incoming" VAT that can be deducted, the tax authority will automatically He'll take it to them. Also, the issue of applying VAT tax rates is no less difficult, which leads taxpayers into difficulty ^[2].

Thus, in Russia, the procedure for calculating VAT has many features and ambiguities, which makes it difficult to quickly understand this tax and forces us to study large amounts of legislation, including the order of their interrelated work. One of the features is its payment not from the amount of income, as for corporate income tax, personal income tax, but in addition to this income. The tax itself is calculated not from income, but from sales, that is, it is not income that is taxed, but sale. The tax has a large number of other unresolved issues. In addition, despite the steady growth of VAT revenues to the budget and the high degree of automation of VAT tax control, the problems considered indicate the expediency of further improving the procedure for calculating VAT.

Foreign practice of applying unaccountable forms of VAT calculation

At the same time, it is necessary to pay attention to the fact that most of the countries of the world, including those under consideration, are striving to implement a similar development strategy and currently have a tax calculation model similar to Russia. Thus, in the vast majority of countries of the world that apply VAT, the filing of a tax return is established. Therefore, the current Russian experience is conceptually similar to the foreign one.

To understand the need to introduce automated tax calculation and the level of lag or superiority of Russia over other countries, consider the experience of other states. The choice in favor of considering these countries was made because of their greatest development in the field of automation of this tax. At the same time, there is no such tax in the United States, instead there is a sales tax, so it will not be possible to consider the experience of this country. At the same time, automated tax calculation has been implemented or partially implemented in some European countries since 2023 ^[13].

Based on the draft law submitted in October 2020 and approved in November, Hungarian taxpayers were able to use the VAT declaration system proposed by the tax authority starting in July 2021

Hungary is going to cancel tax returns and introduce additional details into the invoice, which will allow tax to be calculated on it. The stated purpose of the draft VAT declaration, which is not mandatory for taxpayers, is to reduce the administrative burden, although in practice this may differ ^[13].

In Italy, in 2021, the tax authorities independently calculate the tax and provide taxpayers with the opportunity to edit the data - pre-filled declarations, it is available only to regular taxpayers who make quarterly VAT payments ^[16].

At the same time, in Great Britain, the software used by enterprises independently keeps records in accordance with the rules, generates a tax return, and contacts His Majesty's Office of Tax and Customs Duties (HMRC in English) digitally through the Application Programming Interface (API) platform in order to send a tax return.

In the UK, accounting programs are connected to a special program on the website that calculates the tax and generates a declaration, which is sent to the UK tax service ^[15].

Taxation in Belarus is regulated by the Tax Code of the Republic of Belarus ^[18]. Let's look at the VAT Code. Taxpayers of this tax are the same persons as taxpayers according to Russian tax legislation, but in addition to taxpayers are individuals who import goods (Article 112 of the Code), while in Russia a taxpayer of the simplified taxation system can be a VAT taxpayer, in Belarus a taxpayer can only be a taxpayer who is on a common the tax regime. In terms of determining the place of sale of goods, works, and services, the rules in Belarusian legislation are similar to Russian ones. Also, Belarusian legislation, similar to Russian legislation, establishes a list of transactions that are not recognized as an object of taxation and are not subject to taxation.

It should be noted that in Belarus paper invoices have been abolished and exclusively electronic ones have been introduced ^[19], there is no refund (refund of tax to the taxpayer from the budget in case the amount of tax deductions exceeds the amount payable), except in a number of cases concerning diplomatic representatives. The tax rates in Belarus are similar to those in Russia, in addition to which a rate of 25% is provided for the sale of telecommunication services. The tax declaration in Belarus is also electronic, public authorities are not taking measures to switch to a non-declaration form of tax calculation.

Taxation in Kazakhstan is regulated by the Code of the Republic of Kazakhstan "On Taxes and other Mandatory Payments to the Budget (Tax Code" ^[20]. The tax legislation of Kazakhstan differs to a greater extent from the Russian one compared to the Belarusian one. Thus, articles 82-85 of the Code provide for the registration of value-added tax taxpayers. This rule existed in Russia, but has now been abolished. The basic VAT rate in Kazakhstan is set at 12%, and instead of an invoice, a VAT control account is established ^[21], which is a bank account from which the taxpayer cannot withdraw funds, but to which he transfers them for the purpose of paying tax, as well as paying tax to the seller (the buyer pays for the goods with the current account, and the tax is from the VAT control account). The disadvantage of such a mechanism is the need to make a double payment (from two accounts), but, at the same time, the obligation to pay a separate tax is canceled.

Thus, according to the author, it is advisable for Russia to adopt the foreign experience of canceling the VAT declaration, as this is a trend among advanced countries in terms of digitalization. Following the best practices of other countries will make the country competitive. At the same time, the implementation of a VAT control account in the era of digitalization will not bring benefits.

Conclusions and further directions of research

Thus, in Russia there are a number of prerequisites for the introduction of automated calculation of VAT by tax authorities and the cancellation of the tax declaration for this tax. In addition, a number of European countries are gradually switching to such a concept of tax administration and declaration. Such a reform will not eliminate the need for taxpayers to independently calculate taxes, but will create the prerequisites for such an innovation, as well as minimize the risks of tax evasion. There are many prerequisites for the implementation of the proposed concept, which include digital development, the availability of electronic document management operators and many other possibilities. At the same time, this work is limited to solving the problem only within the framework of VAT, that is, without affecting accounting both in general and in terms of calculating VAT, which is an integral part of accounting for the economic activities of each organization. However, this work touches on one narrow issue, the solution of which provides a potential opportunity to cancel tax reporting on other taxes. The proposed concept will also create the ground for the consistent transfer of the obligation to calculate other taxes to tax authorities with the simultaneous cancellation of tax returns and other forms of reporting on such taxes, strengthen tax control, minimize the risks of tax evasion, free taxpayers from calculation, and tax authorities from traditional inspections.