Digitalization of Tax Administration in Russia: Opportunities and Risks

Abstract

An  active  policy  of  digitalization  of  the  tax  administration  system  in  Russia  is  carried  out  with special  attention  to  the  automation  of  calculation  and  payment  of  taxes.  The  article  summarizes the domestic experience in this area, analyzes the features of tax legislation and regulation under which  these  reforms  are  implemented,  and  identifies  relevant  trends  and  their  prospects.  The results  of  the  analysis  make  it  possible  to  identify  the  opportunities  and  risks  of  development  of the Russian tax system in the context of its digitalization. Further automation of certain taxes (first of all, corporate and personal income taxes) will be associated with the need to overcome a large number  of  legal  imprecisions,  whereas  simplifying  the  design  of  taxes,  in  many  cases,  leads  to economic  distortions.  The  digital  innovations  that  have  already  been  introduced  are  intended  for small or large legal entities, thereby creating a significant bias in the complexity of tax regulation for other taxpayers. The article concludes that it is advisable to use the tool of preliminary filling and  verification  of  tax  returns  by  tax  authorities  as  a  direction  for  improving  the  system  of  tax administration in Russia. The transition to providing taxpayers with motivated opinions of the tax authorities (tax rulings) on certain types of economic transactions is promising as well. The authors also recommend implementing measures aimed at disclosing information about transactions that have signs of aggressive tax planning, according to the recommendations of the OECD. It is noted that the existing mechanisms for resolving tax disputes and legal standards for the protection of taxpayers’ rights will require transformation under increased transparency of business transactions for tax authorities.