Tax Control Research Articles

Application of AI to minimize information risk in tax control: Evidence from Bulgaria

The application of artificial intelligence (AI) in tax control is becoming more and more relevant in the conditions of globalization and digitalization of the economy, which creates a need for effective mechanisms for managing information risk. With the growing volume of data and the complexity of the tax processes, the risk of deviations, fraud and inconsistencies increases significantly. This article aims to examine applied AI tools and approaches that can minimize information risk in tax control, as well as to analyze their effectiveness through the prism of practice in Bulgaria. The methodology is based on correlation analysis, which measures the strength and direction of the linear relationship between pairs of variables. A Pearson correlation coefficient was used to evaluate the variable "Artificial Intelligence" and the different forms of tax control. Kendall's tau-b correlation coefficient was used to assess the linear relationship between the variables of collection, processing, verification, and management of tax information related to the application of AI. The main results show that AI has a positive and statistically significant effect on risk management and cybersecurity, suggesting the potential to improve data protection and reliability. However, the verification and revision of tax information needs to significantly impact AI, which points to the need for further development of these technologies for better integration. In conclusion, the application of AI offers significant opportunities to minimize information risk in tax control but requires targeted adaptation and refinement in specific aspects of control processes.

¿Es un tribunal de cuentas el cambio real que requiere el control fiscal colombiano?

This article analyzes the parliamentary proposal to reform fiscal control through the implementation of a new model: the court of accounts, highlighting the advantages and disadvantages. To this end, it is proposed to differentiate between a jurisdictional court of accounts, an administrative body of fiscal responsibility and a judicial co urt of fiscal responsibility. In addition, the question will be addressed as to whether this new model would be the only one to intervene in the public sphere as an auditing and/or adjudicating entity, or whether it would coexist with the Contraloría General, the territorial comptrollers and the Auditoría General, who would continue to carry out the investigations on the auditing component of accounts review and fiscal oversight. Or, on the contrary, it would be the same court that would carry out such basic action to prescribe the fiscal responsibility in trial. Although the mere existence of a court with powers of “jurisdictional administrative fiscal responsibility control” does not in itself guarantee an effective administration of justice, the creation of a body with an adversarial structure, where one party accuses and the other defends itself, could strengthen the fiscal justice system. In this scenario, an impartial and objective third party, such as a court, could play a fundamental role in resolving conflicts and ensuring a fairer and more efficient tax control.

Tax control and corporate VAT compliance: An empirical assessment of the moderating role of tax strategy

Tax control frameworks (TCF) of higher quality are seen by tax authorities and the OECD as a prerequisite for corporate tax compliance. However, a higher quality TCF can also enable organizations to reduce their tax burden by providing information that allows them to make the best use of opportunities within the boundaries of the tax law. We investigate the effect of TCF quality on tax compliance by looking at the tax strategy of the organization and whether the organization unintentionally or intentionally fails to comply. We focus on Value Added Tax (VAT) and test our hypotheses using a sample of large organizations, using a combination of survey data and tax audit results from the Netherlands. Our results show that a TCF of higher quality is positively associated with VAT compliance, resulting in both less unintentional and less intentional errors requiring tax adjustment. For organizations with a more conservative tax strategy, we find that the quality of the TCF does not affect the level of intentional non-compliance. For organizations with a more aggressive tax strategy, however, the level of intentional non-compliance is conditional upon the quality of the TCF, with a lower (higher) quality TCF leading to more (less) intentional non-compliance.

Improving tax control: tax risks and control data

The article is devoted to new opportunities for using digital technologies of the Federal Tax Service, analysis of changing, in connection with this, requirements for accounting programs, innovative methods of conducting analytical work of tax authorities to identify deviations and gaps in key reporting indicators, financial statements provided by taxpayers with others available to tax controllers , databases. Within the framework of the article, the author reveals changes in tax and financial reporting requirements that came into force in 2024 and provides recommendations regarding possible risks that the Federal Tax Service pays attention to during desk audits. The author also formulates how taxpayers should act in order to protect their organization from claims and sanctions of the Federal Tax Service.

China’s Green Finance: new in fiscal and legal regulation

Having embarked on the formation of an “ecological civilization”, the People’s Republic of China pays special attention to environmental legislation, the creation of a modern system of “green” economy and “green” finance. The effectiveness of legal regulation of environmental relations largely depends on the availability of financial guarantees of relevant environmental standards. One of these guarantees is the environmental protection tax, recently introduced in the fiscal system of the People’s Republic of China.The article analyzes the main elements of this tax — taxpayers, the object of taxation, rates, the procedure for calculating and paying, system of tax benefits. Special attention is paid to the specifics of tax administration, the organization of cooperation between tax authorities and environmental protection authorities, the interaction of tax control and environmental monitoring.

Sugar taxation policy and sugar consumption in Malaysia

Malaysia has been taking initiatives to combat obesity as well as non-communicable diseases. A sugar-sweetened beverage (SSBs) tax was proposed in 2014 and implemented in 2019 with an excise duty of RM0.40 per litre for ready-to-drink sugar content. This article aimed to spark a discussion about Malaysia's current sugar tax policies to reduce excessive sugar consumption among Malaysians. However, the alarming rise in the number of obesity and diet-related noncommunicable diseases indicates that the sugar tax control measures are less effective in combating health issues. This study compares Malaysia's neighbours' sugar tax policies and other sugar consumption-related measures. To combat the emerging sugar-related health issues in Malaysia, the government should collaborate with food manufacturers to reduce the amount of sugar in their food production, abate sugar-containing products’ promotion, educate the consequences of excess sugar consumption at all levels of education, apply sugar taxes with lower tax base rate and specific tax rate depends on sugar addition, and form a regional policy between neighbours.

Evolution of the Content of the Service Function of the Tax Authorities

The subject of the study is the activities of the Federal Tax Service (FTS of Russia), which annually strives to fulfil the objectives of not only increasing tax revenues to the budgets of the budgetary system of Russia, but also to improve the quality level of its activities. The key tool for the fulfillment of this goal for more than a decade remains digital technologies, allowing primarily for the improvement of tax control. Aim and objectives of the study. The analysis of the evolution of the development of technologies of control activity of tax authorities has led to the conclusion that strategically the control activity of the Federal Tax Service of Russia is increasingly built on the changing significance of other functions of tax authorities, among which the tax authority highlighted the service function. The article considers the foundations of the origin of the service function of tax authorities, transformation processes and development prospects taking into account new tools of interaction between tax authorities and taxpayers. At the same time, it touches upon the new services of the Federal Tax Service of Russia, as well as current directions of solving acute issues, in particular, the transition to EDI, the expansion of tax monitoring subjects, construction of a digital tax code, new tools for pre-trial consideration of tax disputes and minimization of tax risks. The study ultimately resulted in the construction of a scheme of the digital outline of the Russian tax system with the allocation of promising areas for further development.

Провалы неопределенности в правовом регулировании налогового контроля в условиях применения искусственного интеллекта

The article examines the problems of legal regulation of tax control that have arisen in connection with the use by tax authorities of new information technologies for checking taxpayers, when IT systems assume more and more control, analytical, organizational and managerial functions, remaining outside the framework of tax legislation. Conclusions have been drawn on the need for legislative regulation of the use of information systems in tax control. As guidelines for overcoming the failures of legal uncertainty in the control and analytical activities of tax authorities conducted with the use of digital technologies, a group of specialized norms-principles that are applicable in the design of legal regulation of tax control in the conditions of advanced development of IT systems is proposed.

Вопросы применения медианного значения рыночного интервала в регулировании трансфертных цен

Material changes in the tax regulation of transfer pricing have occurred in the early 2024, such changes include the introduction of the median value of the market price interval (financial parameters). This is a new instrument in the regulation of transfer pricing, its introduction was not justified in the bill discussion period, but its effect is significant for tax obligations of Russian companies. The new instrument in the transfer pricing system creates additional risks for taxpayers, as well as for the state in terms of economic relations with regard to timely and full calculation and payment of taxes, as well as for parties to international economic activities and internal relations. This predetermines the research subject: the conditions of and procedure for applying the median value for the purposes of tax control of intracompany transaction prices. The research methodology is based on an analysis of transfer pricing recommendations of the ОECD in АННОТАЦИИ Налоги № 2-2024 47 АННОТАЦИИ terms of applying statistical tools to determine the price of the transaction under analysis, provisions of foreign regulations that determine the pricing procedure in transactions between related entities. Special attention is paid to an analysis of foreign court judgments on determination of the market price of intracompany transactions. An analysis of the ОECD recommendations has given an opportunity to single out obligatory conditions for the application of the median value. The author has identified a tendency towards harmonization of approaches to using the median value in foreign countries and the general trend to clarifying regulations in 2022-2024. The judicial practice shows that irrespective of the activity type or type of transactions performed by group subdivisions, courts award uniform judgments in terms of applying the median value and take into account the ОECD recommendations when passing a judgment. The paper concludes that Russian taxpayers face an additional tax risk rooted in the differences in the approach towards the application of the median value in the Tax Code of the Russian Federation and the OECD Transfer Pricing Guidelines for transnational corporations and tax administrations used to regulate taxation of transactions between related entities in explanations of tax authorities and the judicial practice. The scientific novelty of the study lies in the determination of tendencies towards applying the median value for transfer pricing purposes, evaluation of tax consequences of the novelty for Russian taxpayers.

Developing Economic and Mathematic Models of Company Tax Burden Taking into Account Specific Features of Industry

The importance and appraisal of enterprise tax burden is underlined by its serious impact on its finance and business functioning. In order to conduct a high-quality tax controlling, cut tax risks and achieve optimal tax burden the author focuses attention on studying theoretical principles and approaches to estimating the impact of tax burden on business activity of the organization. Through analyzing economic and mathematic methods of assessing company tax burden elaborated by Russian scientists, focus was made on the importance of investigating this indicator within the frames of econometric modeling with the help of language R. To estimate the impact of tax burden on results of business activity and finance and economic factor on the amount of tax burden the article proposed to build models with panel data, whose shaping can help identify steps aimed at upgrading tax control and tax burden management.

TAX BURDEN: APPROACHES TO DETERMINATION AND THEIR INFORMATION SUPPORT

Analysis of tax burden is importantfor assessing the effectiveness of tax policy of the state, tax management of enterprises, is an indicator of the level of tax security of all economic entities and the indicator by which tax authorities carry out tax control of taxpayers. Tax burden scientists consider on the macro-(level of tax burden on the economy in general) and micro-level (the level of the load on the enterprise). At the macro level, it is advisable to determine the level of the total tax burden as the ratio of the amount of tax revenues to the consolidated budget of Ukraine and the revenues of the single social contribution to GDP, as well as the share of tax payments of the integrated budget in GDP, the proportion of social payments in GDP and the rate of growth of these indicators. Analysis of the level of tax burden in Ukraine showed that in 2022 in the conditions of Russia’s full-scale war, GDP at market prices decreased by 4.92%, and the amount of tax payments of the reduced budget increased by 9.89%. In 2020, due to the introduction of quarantine in order to prevent the spread of acute respiratory disease COVID-19 in Ukraine, the GDP growth rate was low (5,53%), and the rate of growth of tax payments was high (15,71%). At the enterprise level, the analysis can be carried out according to the indicators of the total tax burden, tax burdens on income, expenditure, on cash flows, as well as tax on all taxes paid and SSC separately. The source of information for determining the indicators is the Financial Results Report (the aggregate income report and the Cash Flow Report (by direct method). In the system of electronic administration of taxes and duties by the tax authorities, monitoring of indicators-criteria of high-risk tax burden is carried out, according to which the payers canbe included in the plan-chart of checks: the level of payment of income tax and VAT. If the indicators are below 50 and more percent of the level of payment of the relevant tax for the industry, the enterprise falls into the plan-chart of inspections. Theinformation source for determining the level of payment of taxes is the Income Tax Declaration and the VAT tax declaration. Indicators of the level of tax payments by industries are published on the website of the State Tax Service of Ukraine. Also, the tax service determines indicators-indicators of unconditional registration of taxpayers, among which is the indicator of tax burden D, which is automatically formed in the Monitoring System of risk assessment criteria (MSRAC) of the Electronic Cabinet of Taxpayers or can be calculated from the data of the turnover and balance of enterprises. Monitoring of indicators of tax burden on the part of tax authorities is of paramount importance for monitoring compliance of taxpayers with tax legislation and implementation of the tax policy of the state to fill the budget with tax revenues.In the tax management of enterprises, the analysis of tax burden indicators is intended to find out the degree of their compliance with the established limits, industry indicators in order to take timely optimization decisions and avoid checks, penalties and the need to pass the procedure of unlocking tax charges.

The tools of tax control: a conceptual perspective

This study focuses on exploring the areas of insufficient knowledge about tax control tools in public and private sector companies, in order to provide a more solid conceptual understanding of this topic. Qualitative and quantitative research was used, employing documentary review techniques and analysis of results, with workers from the Human Resources and Administration areas as a sample. A digital survey and data collection forms were used as research instruments. In summary, the results revealed a diversity of levels of familiarity and comfort with the use of accounting software, tax preparation and online tools provided by the tax agency.

An integrated approach to the concept and elements of tax administration: theoretical and legal aspects

The objective of this investigation is to thoroughly revise both the theoretical and legal underpinnings of tax administration. This effort entails a comprehensive review and synthesis of scholarly perspectives on the essence of tax administration, juxtaposed with a comparative examination of scholarly debates surrounding its legal and economic facets. Additionally, the study delineates the oft-conflated concepts of tax administration and tax control, clarifying their distinct attributes and interrelations within a unified framework. A meticulous analysis of tax administration's core components is undertaken, including an exploration of its various forms and methods, as well as the examination of international tax authorities' cooperative endeavors in tax administration via tax control mechanisms. Central to this inquiry is the assertion that effective tax administration, predicated on lawful tax collection practices and the principle of taxpayer integrity, constitutes a pivotal element of state strategy in the socio-economic domain. Tax administration, thus, seeks to fulfill tax policy objectives through a comprehensive array of legal and economic tools, mechanisms, and incentives.

The Impact of Earnings Management, Leverage, and Profitability on Tax Avoidance in Mining Sector Companies

Taxes help the country develop in education, health, industry, and more. Since taxes are a major source of state revenue, the government prioritizes tax payment. Industrial taxpayers should follow appropriate norms and correct accounting principles to avoid violating government or country tax legislation. This research aims to study and assess the influence of profitability, leverage and earnings management on tax avoidance in mining companies listed on the Indonesia Stock Exchange (BEI). The focus of this research is on the group of companies in the mining sector listed on the BEI during the period 2019 to 2023. A saturated sampling technique, or often referred to as a census, is used in this research, where all 62 companies in the population are included as samples for a continuous period of 5 years. , resulting in a total of 310 observations. The results of hypothesis testing show that the earnings management, leverage and profitability variables together have a significant influence on tax avoidance. Earnings management, leverage, and profitability each have a large and positive impact on tax avoidance practices. This research is aimed at providing valuable insights and a complete understanding of tax evasion, with the aim of assisting stakeholders, including the government, in making the right decisions and formulating effective tax control laws.

TAX CONTROL AS AN ELEMENT OF INTERACTION BETWEEN TAX PAYERS AND TAX AUTHORITIES

The article analyzes the role and importance of tax control as a key element of interaction between taxpayers and tax authorities. It is determined that tax control is a key element of the tax system, since the functioning of the country's economy depends on its effectiveness, and forms of tax control contribute to the efficiency of tax relations. The elements and methods of tax control are considered, and it is determined that it operates within the framework of strict legal regulation and has a state character. It is established that in order to increase the activity of tax control, it is necessary to resolve the issue of interaction and mutual responsibility between taxpayers and the State. This is possible through the introduction of the basic principles of taxation and the formation of a tax policy that meets budget priorities and the organization of public expenditures. The article identifies the factors that complicate the implementation of tax control. Among them are the difficult financial situation of many taxpayers, the low level of tax culture and taxpayers' distrust of the tax authorities. These problems can be overcome by improving tax legislation, strengthening the responsibility of tax officials, and by taking measures to raise awareness and educate the public about the importance of paying taxes correctly. It is analyzed that the digital transformation of tax audits leads to a significant reduction in the time required for their conduct and an increase in the likelihood of detecting tax evasion. However, this process faces a number of problems that can be solved by amending the relevant legislative acts

Tax control as a tool to curb the shadow economy

Subject. Numerous scientific works in the field of tax administration are devoted to the problems of tax regulation, the imperfections of current tax legislation, as well as the identification of the causes of the functioning of the shadow economy and ways of tax evasion. However, the issues of economic security of the state and tax control in its provision have been little studied today, despite the entry into force in the legal field more than six years ago of the Decree of the President of Russia dated May 13, 2017 No. 208 "On the Strategy of Economic Security of the Russian Federation for the period up to 2030". Thus, the object of the study is tax control, the subject is the effectiveness of on–site tax control as a factor in identifying and suppressing shadow activities in order to ensure the economic security of the country and its public legal entities. Purposes. To summarize approaches to the definition of the term "shadow economy", to distinguish methods for identifying factors of business fragmentation and optimizing the tax burden. Based on the data obtained, we propose an approach to the tax administration process that allows us to quickly respond to "risk signals" in the process of selecting candidates for tax control measures and further conducting tax audits, with a high probability of their effectiveness.Relevance. Tax control is an important regulator of the economic security of the state. The issues of its improvement in order to increase its efficiency and effectiveness have been important at all times. Currently, issues related to the shadow economy are one of the urgent problems affecting the economic development of the country and the functioning of tax systems. Understanding the term "shadow economy" and developing effective counteraction methods are important for tax authorities and society as a whole.Methodology. In the existing conditions of the study, the analysis of the database of tax authorities is carried out (without providing information about taxpayers), the analysis of judicial practice, and methods of logical and statistical analysis are also used. Thus, in the course of the study, the works of foreign and domestic authors were analyzed in order to study the terms "shadow economy" and "business fragmentation". The data of statistical reporting of tax authorities are analyzed, the dynamics of efficiency and effectiveness of on-site tax control are analyzed. The arbitration practice of court cases on the application of business fragmentation schemes by taxpayers has been studied and analyzed, which made it possible to identify a number of distinctive features of business fragmentation from its optimization in order to ensure the sustainable development of organizations (taxpayers) and, based on these indicators, propose a methodology for identifying tax evasion schemes in order to select candidates for on-site tax control.Conclusions. The conducted research allows us to develop the theoretical aspects of such concepts as "shadow economy" and "business fragmentation". Having analyzed the works of domestic and foreign researchers, the author substantiates his definition of the concept of "business fragmentation". The author provides a system of the most significant indicators that can be fully taken as the basis for risk benchmarks signaling the use of fictitious tax optimization schemes by the taxpayer.

Мотивированное мнение налогового органа: правовая природа и возможности обжалования

This article examines the legal nature of the motivated opinion of the tax authority as the final document adopted in the tax monitoring procedure, taking into account the tasks it solves, initially formulated by the legislator when introducing a new form of tax control. The author substantiates the possibility of judicial appeal of the motivated opinion of the tax authority in the context of its legal nature as a non-normative (individual) act. Taking into account the existing law enforcement practice, the author has attempted to assess ways to protect the rights of taxpayers in case of disagreement with the content of a reasoned opinion and the prospects for the development of legal regulation and law enforcement in this area.

Organization and Implementation of Public Tax Control in Russia: Modern Problems and Ways to Solve Them

Annotation. This scientific research addresses the issues of the functioning and development of public tax control, which is the most important component in the system of guarantees of both the system of constitutional principles (especially democracy and the participation of Russian citizens in the functioning of the public administration system), and the system of rights, freedoms, legitimate interests of individuals and legal entities in Russia. The necessity of incorporating the institution of public tax control into the Russian legal system is substantiated. The article examines various approaches to defining the concept of public tax control and substantiates its author's definition. The work analyzes modern problems that hinder the development of public tax control in Russia, including: the lack of enshrinement of this institution of civil society in the Constitution; not developing specific forms, methods and types of public tax control measures in the Russian scientific legal doctrine; the lack of real powers among subjects of public control to exercise effective public tax control; lack of specialized subjects of public control in this area; poor use of modern information and communication technologies by these entities in their activities; insufficient funding for their activities from state and municipal budgets; weak use of foreign positive experience in organizing and functioning of control of civil society in this area; the absence of specific measures of responsibility for counteracting the legitimate activities of representatives of subjects of public control in criminal and administrative legislation. The article develops and substantiates a system of measures to resolve these problems by: incorporating public tax control into the Constitution of Russia; its details in Russian legislation; expanding the powers of subjects of public control; creation of special entities in the field of public tax control, independent of tax authorities; using in their activities positive foreign experience in exercising public control in the field of tax legal relations; developing a system of federal programs to develop the organizational, technical and financial base of subjects of public control, increasing their use of modern digital technologies; tightening measures of criminal and administrative liability for opposing the legitimate activities of subjects of public tax control.

Development of proactive mode of providing tax deductions for personal income tax

The paper studies discussion issues of the simplified procedure for obtaining tax deductions for personal income tax (hereinafter referred to as PIT). The objectives of the study are the following: to review the changes in tax legislation from January 1, 2024 in the field of proactive mode of granting tax deductions for PIT, to justify the increasing role of this interaction between individuals and tax authorities, to identify current problems and to search for ways of solving them. The authors analysed the practice of application of the simplified procedure for obtaining property and investment tax deductions; statistical data of the Federal Tax Service of Russia on the provision of tax deductions in a simplified manner (1-DDK statistical form “On the declaration of personal income”). The analysis of key changes in the provision of deductions entering into force on January 1, 20124 was also conducted. The main problems that individuals may have when receiving deductions or that tax authorities may face in the course of tax control are highlighted, and possible ways to solve them are identified. The authors concluded, firstly, that it is necessary to form prefilled applications not only while receiving tax deductions, but also when paying PIT, for example, when a person sells real estate, cars. Secondly, it is required to enshrine in tax legislation the order of priority of providing tax deductions if a taxpayer has the right for several types of them. The obtained results can be used in developing solutions to taxation of personal income and provision of tax deductions, in legislative drafting on improvement of provisions of the state tax policy.

CONTROLLED TRANSACTIONS: FEATURES OF LEGAL REGULATION OF TAX CONTROL

The article provides a theoretical analysis of the regulatory legal regulation of foreign trade controlled transactions in order to further improve legal regulation. It is noted that in the case of controlled transactions, tax control over prices applied in such transactions is carried out by a special structural unit of the Federal Tax Service. The subject of on-site and desk inspections cannot be price control in such transactions. It is noted that since January 1, 2024, there have been significant changes in the composition of the information provided in the notification and documentation provided by the taxpayer. In particular, starting in 2024, it will be necessary to provide information on the assets used related to the transaction under review, as well as on the economic risks assumed. This information must be confirmed by the relevant documents provided to the tax authorities. From 2024, documentation on verifiable transactions can be requested outside the framework of the Abm.