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Taxes and Taxation
Reference:

Tax incentives for investments in NPOs in a mobilization economy

Garibov Aleksandr Georgievich

ORCID: 0009-0006-0190-6551

Researcher; Center for Scientific Research and Strategic Consulting, Faculty of Taxes, Audit and Business Analysis; Financial University under the Government of the Russian Federation

15 Verkhnyaya Maslovka str., Moscow, 127083, Russia

garibov1507@yandex.ru
Other publications by this author
 

 

DOI:

10.7256/2454-065X.2024.3.70662

EDN:

SJGXPU

Received:

01-05-2024


Published:

08-05-2024


Abstract: The subject of the study is the mechanism of tax incentives for non-profit organizations in the context of a special military operation. The paper examines the importance of NGOs in this context, the main trends in the development of the non-profit sector, as well as possible measures of tax incentives for NGOs to solve primary social problems. The author focuses on the central place of non-profit organizations in the mechanism of ensuring financing of the needs of the state and society, as well as the high degree of importance of the non-profit sector in providing social services to the population, combating emerging challenges in the social sphere. Special attention is paid to the development of proposals on tax incentives for charity from legal entities in terms of corporate income tax and value added tax. The main research methods used are analysis and synthesis, analogy and description, induction and deduction, statistical grouping. The scientific novelty of the work consists in the formulation of specific proposals for changing the current tax legislation to create a mechanism for additional financing of priority social areas and providing the necessary end beneficiaries in a mobilization economy. The proposed mechanism is based on the introduction of new tax incentives for the implementation of charity and the functioning of non-profit organizations, with special attention to the targeting and precision of the proposed measures. Based on the results of the work, a conclusion is made about the effectiveness of the proposed legislative changes based on the calculation of shortfall in state budget revenues and the allocation of advantages of these proposals. In addition, attention is paid to the wide possibilities of the described measures of tax incentives for charity due to the options initially laid down for varying categories of goods subject to tax preferences, depending on the social context and priorities of the state in a certain period of time.


Keywords:

Tax incentives, non-profit organizations, Special military operation, mobilization economy, social expenses, charity, the non-profit sector, beneficiaries, non-operating expenses, VAT

This article is automatically translated.

 

Introduction. Problem statement. Today, the features of the formation of a mobilization economy can be traced in Russia. Such structural changes are dictated primarily by the external challenges that the Russian Federation has been facing in recent years [1]. The essence of the mobilization economy is to find additional sources of income to finance the necessary budget expenditure items. In the current conditions, these funds are needed to ensure the conduct of a special military operation. In fact, such additional financing can be made from several sources:

1) collection of new tax and non-tax payments from businesses and the public, which allow obtaining additional sources of financing for priority budget expenditures;

2) increasing the rates of current tax and non-tax payments;

3) encouraging organizations to independently finance the necessary areas of expenditure through the creation of such conditions for the functioning of enterprises that would allow an economic entity to independently participate in the financing of priority cost items for the state.

Let's consider the mechanism of the latter. The source for the implementation of the third way are non-profit organizations, whose function is to provide social services to the population, without having the goal of making a profit. Non-profit organizations, as a provider of social services, play an important role in the functioning of the social sphere. NGOs, being the most important institution of civil society, direct their efforts to solving various social problems, as well as meeting the non-material needs of the population. In addition, NGOs are the subject of social innovation, since they are the first to face the newly emerging social demands of society and are constantly searching for new ways to solve emerging problems and contradictions [2]. The validity of the considered financing path is supported by the significant role of non-profit organizations in the socio-economic component of the country's life: "The contribution of NGOs to the country's GDP is 1.5% – this is about 2 trillion rubles, which is comparable to the amount of funds allocated by the state for a number of serious areas in the social sphere ..." - these are the data according to the results of 2023 given by Deputy Minister of Economic Development of the Russian Federation Tatyana Ilyushnikova (Ministry of Economic Development of the Russian Federation. Tatyana Ilyushnikova: In 2023, the contribution of NGOs to the country's economy amounted to 2 trillion rubles. 08.12.2023. URL: https://www.economy.gov.ru/material/news/tatyana_ilyushnikova_v_2023_godu_vklad_nko_v_ekonomiku_strany_sostavil_2_trilliona_rubley.html#:~:text="Âêëàä%20NCO%20b%20BVP%20country,serious%20directions%20b%20social%20sphere).

In the context of Russia's special military operation (hereinafter referred to as ITS) The non-profit sector has expanded its field of activity. According to a survey conducted by the PULSE NGO project, more than 40% of NGOs work with different categories of beneficiaries, one way or another related to their own. The distribution of assistance among different categories of beneficiaries is shown below (Figure 1).

Figure 1. Distribution of assistance provided by NGOs by different categories of beneficiaries

Source: compiled by the author independently according to the data of the Blitz survey "Results of 2023 for NGOs" of the NGO PULSE project. URL: https://pulsngo.ru/itogi23

 

Such assistance is provided in various forms: humanitarian (clothing, food, hygiene products, medicines); psychological assistance; legal and other consultations (assistance with registration of necessary documents, solving social issues); logistical support (provision of military equipment, protective equipment, equipment, etc.).

For many NGOs, it is important to increase trust and reputation among recipients of social services related to the participants of their own and "attached" territories. In addition to social significance, there is another important reason. The attention of the state, society, and big business is mostly focused on the special operation, respectively, the main funding and donations are concentrated on their own, which, on the one hand, makes it possible to receive more funds to fulfill the statutory goals and ensure the activities of non-profit organizations, and, on the other hand, somewhat limits the interest and support of donors of other social organizations projects that are not related to the subject of the special operation.

The relevance of tax incentives for NGOs is also confirmed by the financial condition of companies.

Trends in the development of the non-profit sector

According to Report No. 1-JUR, as of 01.01.2024, the number of operating non-profit organizations amounted to 606727 (Figure 2). For comparison, at the beginning of 2023, the number of registered and operating NGOs was 588434; at the beginning of 2022, their number was higher and amounted to 603534 organizations. As of January 1, 2021 and January 1, 2020, the same indicator was 614075 and 623103, respectively. Thus, until 2023, the statistics of the Federal Tax Service of Russia also show the formation of a trend towards a decrease in the number of functioning non-profit organizations. In 2023, we see a certain recovery growth and even exceeding the indicators of 2022, however, it is not necessary to talk about a stable growth trend yet.

 

Figure 2. Dynamics of the non–profit sector in Russia in 2020 - 2024, in the absolute number of organizations

Source: compiled by the author independently according to the data of the report No. 1-JUR

 

In the context of the economic turbulence that has persisted in recent years, it is also important to assess the development trend of the non-profit sector in Russia by seeing changes "from the inside". Let's pay attention to the study "Assessment of the level of organizational development of NGOs" conducted by the project "PULSE of NGOs". According to respondents and experts, financial security and financial stability remain one of the most urgent and acute problems for non-profit organizations in Russia. According to the data provided, in 2023, indicators of financial security and financial stability remain below average and showed a slight decrease compared to 2022. The study in question says that only 31% of NGOs have enough resources for their current work, and only 39% of NGOs have a reserve to work for at least three months. Moreover, these values indicate that less than half of the non-profit sector organizations have an annual budget and assess their financial performance. At the same time, about 41% of NGOs have a short–term planning horizon of less than a year. The data provided in the study, in our opinion, indicate the emerging instability of financial revenues, the lack of proper diversification and creation of reserves, especially among small and medium-sized NGOs, and inconsistency in accounting and planning in many organizations. This situation is becoming quite a significant risk for many NGOs.

For a more detailed justification of the need to develop tax support for NGOs, we conducted an analysis of their reporting.

Based on a sample of 10,000 NGOs obtained from the SPARK-Interfax system, an analysis of the financial condition of the non-profit sector was carried out: depending on the size of assets, three groups were identified using the interval method. The resulting intervals and the number of organizations in each group are presented below (Table 1).

Table 1 - Distribution of assistance provided by NGOs by different categories of beneficiaries, thousand rubles.

Group

The beginning of the interval

End of the interval

Number of NGOs, units.

Small

1

24 930

8 677

Medium

24 930

49 857

451

Large

49 857

9 369 688

505

 

It is worth noting a significant unevenness in the distribution of non–profit organizations - the share of a group of NGOs with a small number of assets exceeds 90%.

In each of the resulting groups, ranked by asset size, an analysis was carried out on the main financial indicators of the organization. The results are presented in the table (Table 2)

Table 2 - Dynamics of growth of expenses that reduce the tax base for corporate income tax in accordance with paragraph 2 of clause 19.6 of clause 1 of Article 265 of the Tax Code of the Russian Federation

Group

Return on assets, %

Return on sales, %

Liquidity ratio

Profit per 1 organization, thousand rubles.

Net profit per organization, thousand rubles.

The average size of assets, thousand rubles.

The average indicator of short-term borrowed funds, thousand rubles.

Small

7,24

5,33

1,61

297

234

3 734

125

Medium

6,75

5,18

1,70

2 832

2 247

34 980

1 637

Large

3,26

8,18

2,28

11 139

9 922

317 916

8 807

 

In terms of the liquidity ratio, organizations of all groups have an average normal value without strong differences. At the same time, there is a rather strong inequality in other indicators related to profit and the average size of assets. Also, in terms of the average size of assets, one can notice its significant difference from the upper limit of the first group – by more than 6.6 times. That is, the overwhelming number of NGOs in the sample have a small number of assets, which further indicates the inequality of economic entities in the non-profit sector.

At the same time, the average indicator of short-term borrowed funds for all groups is quite significant compared to the corresponding indicator of average profit. Thus, for small organizations, the share of short-term loans is 42% of profit, for medium-sized ones - 58%, for large ones - 79%, which indicates a significant debt burden.

Thus, the above analysis showed the inequality of NPOs in financial security, both in terms of available assets and in the amount of profit received; as well as the presence of a number of financial problems.

All of the above indicates the need to stimulate the development of the non-profit sector, where tax incentives play an important role.

The existing mechanisms of tax incentives for benefactors within the framework of the

When using an alternative incentive mechanism for subsequent financing of government expenditures, it is NGOs that are the most important part of it, taking on a significant part of them. Non-profit organizations become "partners" of the state, attracting additional funding to solve socially significant public issues [3]. Within the framework of such support, a special place is occupied by tax incentives, which play a decisive role in the market economy [4]. The susceptibility of the non-profit sector to tax incentives is certainly high. The Ministry of Finance, in its recent letter, systematized the main tax benefits associated with the conduct of the CBR (Letter of the Ministry of Finance of the Russian Federation dated 12/18/2023 No. 03-00-07/122672). In particular, clause 19.6 of clause 1 of Article 265 of the Tax Code of the Russian Federation allows reducing the tax base for corporate income tax on the value of property donated to socially oriented non-profit organizations (hereinafter SONKO) included in the relevant register. Such expenses are taken into account when calculating corporate income tax only in an amount not exceeding 1% of sales income. Also, according to clause 19.12, clause 1, Article 265 of the Tax Code of the Russian Federation, non-operating expenses include gratuitously transferred funds and property to persons serving in the Armed Forces of the Russian Federation under a contract, mobilized, as well as their family members. It should be noted that for military personnel and their families such incomes are not subject to personal income tax according to clause 93 of Article 217 of the Tax Code of the Russian Federation. In other cases, it is impossible to reduce the taxable profit to taxpayers by gratuitous transfer of labor.

The tax preference provided for in paragraphs 19.6 of paragraph 1 of Article 265 of the Tax Code of the Russian Federation was introduced in 2020 and already in the next three years there has been a steady increase (Figure 3) in the amount of expenses for SONKO's gratuitously transferred property, taken into account when calculating the tax base for corporate income tax. Such rapid growth rates in 2022 and in the first 9 months of 2023 can be attributed to the research data given above - the increasing interest of businesses in donations for their own purposes.

Figure 3. The dynamics of the growth of expenses that reduce the tax base for corporate income tax according to paragraph 2 of paragraph 19.6 of paragraph 1 of Article 265 of the Tax Code of the Russian Federation

Source: compiled by the author independently according to the data of the report of the Federal Tax Service of Russia on form No. 5-P

 

Considering in the same context the imposition of value added tax, we highlight clause 12, clause 3, Article 149 of the Tax Code of the Russian Federation, which exempts from taxation the gratuitous transfer of labor within the framework of charitable activities. A prerequisite is compliance with Federal Law No. 135 "On Charitable Activities and Volunteerism (Volunteerism)" (Federal Law "On Charitable Activities and Volunteerism (Volunteerism)" dated 08/11/1995 No. 135-FZ). According to Clause 1, clause 2, Article 170 of the Tax Code of the Russian Federation, VAT on goods (works, services) purchased for use in non-taxable transactions is not deductible and must be taken into account in the cost of such goods (works, services). If VAT was deducted upon purchase, then the amount of tax will have to be restored for gratuitous transfer for charitable purposes (clause 2, clause 3, Article 170 of the Tax Code of the Russian Federation). Of course, such a provision of legislation may somewhat discourage charitable activities for organizations or reduce its size.

In our opinion, it is important to consider the mechanism of implementing social expenditures through NGOs not only from the side of implementing support measures directly for NGOs themselves, but also from the side of tax incentives for other participants in economic relations for gratuitous financing of non-profit organizations [5]. It is necessary to form an orderly system of tax benefits in terms of charity, to stimulate the social aspect of taxation [6].

 

Development of measures for additional tax incentives for charity

We consider it advisable to consider the possibility of amending the Tax Code of the Russian Federation to grant the right not to restore VAT amounts when goods (works, services) are donated to non-profit organizations within the framework of charitable activities. At the same time, this preference should be limited, firstly, in size, and secondly, in the objects of its distribution, that is, it is possible to create a separate closed list of goods that will be exempt from VAT restoration. To do this, we propose the addition of paragraph 2 of paragraph 3 of Article 170 in the form of a new 8 paragraphs. with the following wording: the provisions of this subparagraph do not apply to the transfer of goods (performance of works, provision of services), the list of which is approved by the Government of the Russian Federation, to non-profit organizations in an amount not exceeding 1% of the proceeds from sales, determined in accordance with Article 249 of this Code. The possibility of implementing such a measure is justified by the presence of a similar preference in corporate income tax, proposed and introduced into legislation several years ago, according to which organizations have the right to include in non-operating expenses the value of property donated to SONKO in an amount not exceeding 1% of sales revenue (subclause 19.6 of clause 1 of Article 265 of the Tax Code of the Russian Federation). At the same time, it is proposed to slightly change the parameters of the corporate income tax preference, the current version of which is given above. It seems advisable to extend this provision to all non-profit organizations, not limited only to socially oriented NGOs from the relevant register. To do this, it is possible to amend paragraphs 19.6 of paragraph 1 of Article 265 of the Tax Code of the Russian Federation and the statement of paragraphs.2 of this subparagraph in the following wording: to non-profit organizations in respect of goods, the list of which is approved by the Government of the Russian Federation.

The proposed tax preferences for VAT and NGOs are, in fact, mirrored: they are measures aimed at stimulating charity, or rather at stimulating gratuitous financing by commercial organizations of non-profit organizations. At the same time, of course, such measures are budget shortfalls. Therefore, it is necessary to maintain the current limit of 1% of sales revenue in terms of reducing the corporate income tax base, and extend this restriction to the proposed VAT preference.

In addition, since it is proposed above to extend the tax preference to all NGOs, it is necessary to limit the categories of labor to which it applies. The existing provision on corporate income tax is aimed at certain recipients of assistance (SONKO), we believe that it is necessary to regulate the objects of such assistance, what specifically and for what purposes it is concentrated. In this regard, we propose to create a closed list of goods (works, services), approved by a decree of the Government of the Russian Federation, the contents of which will be covered by both the proposed VAT and NGO tax preferences.

Such a restriction will create targeted incentives: varying the categories of goods in the list will give impetus to the gratuitous transfer to non-profit organizations and in the future to the final recipients of those goods that are most in demand in the social sphere in a certain time period. With the application of such targeted tax support measures, the state will be able to set the direction of charity in different social contexts, while not increasing budget revenues and not creating wide opportunities for businesses to use illegal tax optimization methods.

Taking into account the emerging priorities of the state and NGOs in the social sphere in the context of a special military operation, we propose to include in such a list the goods that are most in demand for various categories of the population affected by their own. For example, products included in humanitarian aid to the population of new territories, medical devices and equipment transferred to military personnel, rehabilitation facilities for combat veterans, etc. Subsequently, such a list may be changed and supplemented depending on the social order and priorities of the state in the social sphere.

Of course, the loyalty of the state towards the non-profit sector should not be excessive, otherwise there is a high probability of abuse by taxpayers of a preferential position on the one hand, and tangible financial losses of the state on the other hand [7]. Speaking about the risks of using illegal tax payment optimization schemes when using this tax preference, we note that many products offered at this stage are subject to mandatory labeling, for example medicines. A single requirement for the transferred goods may be the coincidence of the commodity nomenclatures in the consignment note and the list of the Government, as well as the existence of an agreement on the gratuitous transfer of goods.

Let's assess the impact of the proposed measure in terms of accounting for non-operating expenses of charity costs associated with a special military operation. According to the FTS report for 2022, the amount of donations recognized as such in accordance with the civil legislation of the Russian Federation in favor of non-profit organizations amounted to 349,238,080 thousand rubles. According to a study by Sber Private Banking, the share of legal entities in the amount of donations made in the country is about 75%, that is, donations from the corporate sector accounted for about 261 billion rubles in 2022. Multiplying this amount by the corporate income tax rate of 20%, we get an amount slightly exceeding 52 billion rubles. However, it is necessary to understand that the real amount of budget revenues falling out will, in our opinion, be somewhat less for the following reasons: a) the proposed measure concerns a limited list of goods approved by a separate Resolution and concerns needs related to ITS, which is only one of many components in the structure of donations; b) the current restriction on accounting for the expenses in question, fixed in paragraphs 19.6, paragraph 1 of Article 265 of the Tax Code of the Russian Federation in the amount of 1% of proceeds from implementation, which significantly reduces the shortfall in budget revenues. Thus, under the stipulated restrictions, the proposed tax preference will lead to shortfall in revenues of the consolidated budget of the Russian Federation in smaller amounts than the maximum possible estimate of 0.9% of corporate income tax receipts.

It should be noted that legislative initiatives to stimulate charity in the context of ITS have already been voiced. So, in 2023, deputies of the Fair Russia – For Truth faction submitted for consideration a draft law envisaging a change in the provision of Article 286.1 of the Tax Code of the Russian Federation and granting the right to an investment tax deduction for organizations financing the logistical support of the Armed Forces of the Russian Federation and military personnel participating in a special military operation zone. Also, according to the explanatory note to the draft law, a deduction can be obtained when transferring funds to NGOs for the formation of endowment capital for these purposes. It should be noted that this draft law is inferior to our proposals set out in section 2.3 of this work. Firstly, the last part of the initiative under consideration does not comply with current legislation, since it directly contradicts paragraph 2 of Article 3 of Federal Law No. 275 (Federal Law "On the Procedure for the Formation and use of Endowment Capital of Non-Profit Organizations" dated 12/30/2006 No. 275-FZ): the list of goals for the formation and expenditure of endowment capital is closed and expenses related to armed forces are not included there today. Secondly, we consider this bill to be not fully worked out, because neither the draft itself nor the explanatory note makes it clear how this preference works. Who should be the recipient of this assistance (are there any requirements for the organizational and legal forms of recipients), exactly how the confirmation and control of the direction of such funds will take place, what are the criteria for inclusion in logistical support - these and many other questions on the elements of this draft law remain open. Based on this, we consider the initiative under consideration to be inappropriate. In our opinion, the amendments proposed by us in the context of tax incentives in the context of the CBA are more comprehensive and better meet the current needs of society and the state, the current socio-economic situation. Here are some arguments:

1) the amendments proposed by us are targeted and targeted, focused on specific products that are most in demand, while stimulating the process of charity in general;

2) after changes in the external and internal market conditions, our proposed measure will be able to be aimed at stimulating other goods in demand in other circumstances, there will be no need to amend legislation or repeal this provision;

3) the proposed changes will affect taxpayers of the country equally, unlike the mechanism of investment tax deduction, dependence on the regional agenda is not created and the lost revenues are not shifted to regional budgets, which are in extremely different situations and are mostly in deficit.

Conclusion

In the current socio-economic situation, primarily due to the external conjuncture, in order to further ensure all necessary expenditure obligations, including those related to the ongoing special military operation, it is possible to ensure the operation of an alternative financing mechanism through charity, described in this work. The non-profit sector not only solves the most important social tasks by providing social services to the population and acting as a subject of social innovation, but also acts as a "bridge" between business and the social sphere. In our opinion, it is necessary to use the not yet fully utilized potential of non-profit organizations in this area and, with the help of tax incentive tools, direct the efforts of entrepreneurs to solve priority state tasks by using the "third" sector as a distributor of funds.

The measures proposed in the article to change tax legislation are targeted and aimed at stimulating certain areas that are most relevant and sensitive for the state and society in a certain time period. The implementation of the above proposals, on the one hand, will become a mechanism for additional financing of expenses and provision of beneficiaries associated with the implementation of the CBO, and on the other hand, it can form the basis for the formation of the concept of tax regulation of the non-profit sector, which today has still not developed in its full form for the qualitative growth of the social sphere in Russia [8].

References
1. Ryaboshapka, A. I. (2022). Mobilization economy: opportunities and reality of the modern Russian economy. Academic Bulletin of the Rostov branch of the Russian Customs Academy, 4, 53-59.
2. Fominykh, V.Yu. (2021). Non-profit organizations as subjects of social innovation. Questions of student science, 8, 110-113.
3. Nekrasova, D. V., Mukhin, M. A., & Urasova, A. A. (2023). Non-profit organizations as subjects of socio-economic development of the regions of the Volga Federal District (based on the materials of the Presidential Grants Fund). Bulletin of the Perm University. Ser. "Economics", 2, 201-214.
4. Steshenko, Yu.A. (2018). Institutional limitations of tax incentives that hinder economic growth at the present stage. Finance and Management, 2, 27-42.
5. Demidov, A.V. (2013). Taxation of charitable activities in Russia: problems and prospects. Non-profit organizations in Russia, 4, 15-21.
6. Grishchenko, A.V., & Grishchenko, Yu.I. (2013). Taxation of charitable activities in Russia: problems and prospects. Bulletin of the Moscow University of the Ministry of Internal Affairs of Russia, 4, 169-174.
7. Grishchenko, A.V., & Grishchenko, Yu.I. (2023). On the need for tax regulation of commercial activities of non–profit organizations. Financial Management, 3, 87-98.
8. Garibov A.G. (2023). Development of tax incentives for non-profit organizations. Taxes and taxation, 5, 54-70.

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The subject of the research in the peer-reviewed publication is tax incentives for investments in non-profit organizations in a mobilization economy. The research methodology is based on statistical processing of survey results and statistical observation data, the use of general scientific research methods. The authors attribute the relevance of the work to the fact that structural changes in the economy, dictated primarily by external challenges faced by the Russian Federation in recent years, actualize the search for additional sources of income to finance the necessary expenses. The scientific novelty of the work, according to the reviewer, consists in the conclusions about the need to use the potential of non-profit organizations in financing priority expenditures in order to use tax incentive tools to direct the efforts of entrepreneurs to solve priority state tasks. Structurally, the following sections are highlighted in the article: Introduction, Trends in the development of the non-profit sector, Existing mechanisms of tax incentives for benefactors within the framework of ITS, Development of measures for additional tax incentives for charity, Conclusion, Bibliography. The publication focuses on encouraging organizations to independently finance the necessary areas of expenditure through the creation of such conditions for the functioning of enterprises that would allow an economic entity to independently participate in financing government-priority expenditures. The authors believe that non-profit organizations, being a provider of social services, play an important role in the functioning of the social sphere, direct their efforts to solve various social problems and meet the intangible needs of the population; they are the subject of social innovations, since they are the first to face emerging social demands of society. The publication analyzes the distribution of assistance by different categories of beneficiaries, reflects the forms of assistance: humanitarian (clothing, food, hygiene products, medicines); psychological assistance; legal and other consultations (assistance with the preparation of necessary documents, solving social issues); logistical support. There was a change in the trend towards a decrease in the number of functioning non-profit organizations, observed until 2023, for a certain recovery growth and even exceeding the indicators of 2022. Based on a sample of 10 thousand non-profit organizations, the authors analyzed the financial condition of the non-profit sector, and depending on the size of assets, three groups were identified: small, medium, large non-profit organizations; their inequality in financial security is shown, as well as the presence of financial problems; a conclusion is made about the need for tax incentives for the development of the non-profit sector; proposals for point and targeted adjustments to tax legislation are made. The bibliographic list includes 8 sources – scientific publications of domestic authors on the topic under consideration in Russian. The text of the publication contains targeted references to the list of references confirming the existence of an appeal to opponents. Of the reserves for improving the publication, the following should be noted. Firstly, it is better to avoid abbreviations in the title of the article. Secondly, the text of the work contains descriptions of information sources that should be included in the bibliographic list with appropriate references – this will facilitate and facilitate the perception of the material presented by the authors by readers. The topic of the article is relevant, the material submitted for review reflects the results of the research conducted by the authors, contains elements of increment of scientific knowledge, corresponds to the topic of the journal "Taxes and Taxation", may arouse interest among readers and is recommended for publication after consideration of the wishes expressed by the reviewer.