Capacity Building
The Federal Tax Service of Russia (FTS of Russia) proactively invests in digital capabilities of tax administration, which has resulted in sustained increase in domestic revenue.
Fostering international cooperation, FTS of Russia shares the expertise in digital transformation with foreign tax administrations and provides various capacity building programs: from trainings and consultations to technical assistance in IT solutions
implementation and modernization of information systems.
Technical assistance can be provided at the request of a foreign tax administration. In major cases, the technical assistance is tailored to the needs of foreign tax administrations taking into account differences in tax policy and digital maturity.
Advisory services and analytics
The FTS of Russia has extensive experience in implementing a wide range of digital solutions in the field of tax administration, which allows us to consult foreign countries on the implementation of modern mechanisms for providing better services to taxpayers
and increasing effectiveness of tax audit.
A comprehensive review of the current tax administration system helps to identify areas of improvement in order to increase tax collection and simplify the compliance process.
Advisory services and analytics include:
Tax policy analysis
Review of tax administration’s business processes
Supporting implementation and modernization of tax administration’s information system
Advisory services on enhancement of systems and processes to better serve taxpayers and decrease tax compliance burden.
Improvement of tax administration’s information system
Extensive experience in technical assistance to foreign tax administrations allows the FTS of Russia to go beyond the existing products and build a full-custom solution based on the most recent trends in tax technology.
Improvement of tax administration information system includes:
Technical audit of existing information and communication technology system and elaboration of the development strategy and design of the information
system
Implementation of the new tax administration information system or renewal of the existing one
Review of the IT infrastructure in tax administration
The FTS of Russia conducts technical audit of the current IT infrastructure and relevant systems and processes, including data centers and telecommunications.
Advisory services and analytics include:
Comprehensive analysis of tax administration processes with regard to the IT infrastructure used
Audit of the current architecture of information systems, structure and hierarchical model of databases with regard to the IT infrastructure
and telecommunications used
Information security audit
Preparation of the development strategy and the concept of modernization of the existing IT infrastructure
Implementation of an Automated VAT Control System (ACS VAT)
ACS VAT is a software that provides automation of crosschecking of VAT tax returns and electronic invoices.
Prerequisites for the introduction of ACS VAT:
Inability to check each transaction that is subject to VAT in course of ordinary desk audit
Lack of centralized data for a detailed analysis of the supply chains
VAT reporting only contains overall indicators, which does not allow the determination of correctness of VAT calculation and payment
The ACS VAT uses a risk-based approach and assesses of the possibility of committing a tax violation by a taxpayer.
The ACS VAT algorithm is based on the concept of reflecting transactions of both the buyer and seller within a tax reporting process.
The ACS VAT allows to compare all counterparties transactions in real time, identify VAT tax gaps and tax risks.
The system allows to automate tax procedures and minimize the human factor influence during assessments, which increases the effectiveness of tax audit.
ACS VAT capabilities:
Visualization of the all supply chains across the country
Automated risk analysis
Dashboards with macroeconomic indicators
Automated assessment of the effectiveness of the tax authorities’ activities
Implementation stages:
Review of the current model of VAT administration
Draft amendments to the regulatory framework
Development of the ACS VAT
Piloting of the ACS VAT
Support of the implemented system (if necessary)
Outcomes:
For the tax authority:
Identification and suppression of the activities of fraudulent taxpayers
Availability of accurate data on the volume and value of trade turnover by region and industry sector
Cost reduction
For business:
Reduction of administrative burden
Reduction of the number of audits
Creation of a comfortable environment for doing business
For the economy:
Prevention of unfair competition
Increasing the transparency of the economy by reducing the shadow sector
Receiving additional tax revenues to the budget
VAT-Lite Administration Platform
VAT-Lite is a simplified version of automated VAT administration, which does not imply an electronic invoice system to be mandatory.
Information on all transactions of the taxpayers is collected in the VAT tax returns in the form of invoice registers. It allows to comply with the principle of mirroring of taxpayers' data and identification of the tax gap as implemented in the ACS VAT
(Automated VAT Control System).
The VAT-Lite Administration Platform is the most convenient adaptation of ACS VAT for a small number of administered taxpayers. Tax returns are sent to the tax authorities either via the taxpayer's personal account or by means of via EDI operators.
Online Cash Registers Control System
The Automated Online Cash Registers Control System is a unified system for collecting, processing and storing primary data on the entire retail trade in real time.
Prerequisites for the implementation of the Online Cash Registers Control System:
Incompleteness of relevant data on retail trade
Lack of real-time analytics about socially significant sectors of the economy
Lack of transparency in retail activities
Need for automated control over the use of cash register equipment and compliance with taxpayers cash discipline
The system has a real time data on the turnover and actual prices of goods. Together with the B2B invoicing system the Online Cash Registers Control System could bring the picture of the whole economy starting from importing and production of goods up
to sales to final consumers.
Implementation process stages:
For the tax authority:
Review of the existing infrastructure
Supply of the equipment required for Online Cash Registers Control System (if necessary)
System and mobile application development
Piloting and putting the Online Cash Registers Control System into operation
Online Cash Registers Control System maintenance (if necessary)
Special tax regime for the self-employed
The main task of the special tax regime is to create a simple and convenient way to legally conduct business and pay taxes for "micro-entrepreneurs".
All the interaction between the self-employed and the tax authority takes place remotely via a mobile application and online Taxpayer Personal Office. The self-employed person does not need to file tax returns or acquire a cash register, as the application
itself keeps track of income, calculates taxes, and generates an electronic receipt.
The introduction of a special tax regime for the self-employed and its digitalization in Russia have motivated a large number of small entrepreneurs to operate legally and allowed them to officially conduct business and pay taxes.
Advantages of special tax regime:
Simplified registration. Registration is fully processed via mobile application
Minimal tax rates. No other mandatory payments
Tax deduction for newly registered self-employed
Performing business activities without the need to register as a legal entity or individual entrepreneur
Enjoying privileges identical to those of a legal entity or individual entrepreneur (such as grants, participation in public tenders, lease of
state property, confirmation of income, etc.)
No reporting. Revenue accounting is processed automatically in the mobile application
Control documents (receipts) formation. No need to buy a cash register. Receipts can be issued in the mobile application
Automatic tax payment via linked bank card in mobile application
Digital tax regime capabilities:
Online registration and verification of self-employed Online Taxpayer Personal Office for the self-employed as the main digital channel for communications
with tax authorities
Issuance of sales invoice and official receipt automatically transmitted to the tax authorities online
Automated tax base calculation based on cash register receipt data
Online tax payment
Mobile taxpayer application for Android and iOS operating systems
Implementation process stages:
Review of existing infrastructure
System development (reception complex, information processing and storage), mobile application and Taxpayer Personal Office for the self-employed
Piloting and putting of the regime into operation
Trial operation
Production run
Digital tax regime maintenance (if necessary)
Outcomes:
For the tax authority:
Micro businesses’ tax administration process automation
For business:
Simple and convenient conditions for running a micro business
Official self-employed status and access to government benefits
For the economy:
Increase in the economy transparency due to transparency of micro businesses’ activities
Additional tax revenue
Real-time information on goods and services sold by micro business
Risk profiling system based on the Common Repotting Standard data
The application of the Common Reporting Standard (CRS) provides for the annual automatic exchange of financial account data in accordance with Article 2 of the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information of October 29, 2014, signed by the Russian Federation on May 12, 2016.
The identification and risk profiling system allows to:
Automate the identification of received data through verification with internal databases
Detect non-payment of taxes on foreign income by comparing with the tax returns data and form risks
Provide visualization of the automatic exchange data for the tax authorities analytical work
Automate risk processing controls to monitor the risk processing throughout its lifecycle
Inform taxpayers about the identified risks through a Taxpayer Personal Office
Functional areas of the system:
Data processing
Extraction and primary processing of received data and preparation for analysis. Transliteration and normalization of the data are carried out due to the language differences (data input is in Latin transcription)
Automatic data identification
The processed data is simultaneously compared with all internal data sources to search for matches. A record is considered identified only if two elements of the original record match the internal database (e.g., name and date of birth)
Verification module
If a record cannot be uniquely identified automatically, it is passed to the manual verification module
Risk Profiling
Calculation and visualization of risks of non-payment of taxes from foreign sources
Processing of identified risks
Monitoring of the identified risks processing
Implementation process stages:
Review of existing infrastructure
Draft changes to the regulatory framework
Building the system
Piloting and putting the system into operation
System maintenance
Innovations in tax administration
Key benefits:
Learning from experience executives of the FTS of Russia
Focused on strategic changes
Supporting implementation and modernization of tax administration’s systems
Developing solutions that solve taxpayers’ needs
Program 1
Fundamentals of Cross-border Transactions
The program is tailored to provide an in-depth understanding of the unique aspects of cross-border transaction management. Upon completion, participants will possess the expertise and abilities required to address the complexities of international taxation,
tax administration, and tax control.
The program consists of the following topics:
Introduction of risk control over cross-border transactions
Administering financial transactions, share deals and international transportation
Specifics of intra-group transactions
Program 2
VAT Administration
The program is designed to introduce the fundamental principles of value-added taxation and an overview of the specific aspects of tax control measures related to VAT refunds and payments. Tax officials will gain valuable insight and expertise in the
field of tax administration and control, with a particular focus on indirect taxation.
Participants will be introduced to:
Indirect taxation: main features and legal regulation
VAT implications of cross-border transactions
FTS of Russia experience of tax control over VAT refunds and payments
Program 3
VAT on Digital Services: Russian Practice and International Experience
The program is tailored to help participants gain a solid foundation in the latest VAT procedures for digital services to gain insights into tax compliance and control mechanisms for VAT application on digital services, along with the practical skills
to navigate this complex area.
Program includes valuable insights to:
Indirect taxation of digital services: basics and international experience
Russian experience of "Google tax" implementation
Remote administering of non-resident foreign digital companies
Program 4
Client-centric Approach to Tax Administration
The program is primarily focused on enhancing the proficiency of effective communication and imparting the fundamentals of a client-centric approach within the tax administration operations. Upon completion of the training program, participants will obtain
the knowledge and skills required for sufficient operation within the context of a client-centric approach to tax administration.
Program is based on the following topics:
Applying User Experience in digital taxpayers’ services
User Experience research tools application
Target audience analysis: identifying customer behavior patterns and getting feedback to determine User Experience requirements
Conflict-free communication algorithms, effective argumentation, and objection handling skills
Overcoming challenges in communication building: key barriers and types of information distortion
Program 5
Cooperative Compliance
The "Cooperative Compliance" program is tailored to impart best international practices and practical knowledge to facilitate and promote taxpayers’ tax compliance, based on the principles of greater collaboration, integrity, and transparency between
taxpayers and tax administrations. Participants will gain a comprehensive understanding of the practical skills required for the effective implementation of cooperative compliance tools.
Tax officials will receive comprehensive training in the following areas:
Cooperative compliance framework
Cooperative compliance infrastructure
Potential risk areas for in-depth control using risk markers
Program 6
Process-mining Approach for Improving Tax Functions
The program is geared towards equipping tax administration staff with the practical knowledge and skills they require to navigate digital transformation through the application of process-mining technologies to acquire insights into continuous improvement
methodologies and develop the ability to implement process-mining effectively within the tax administrations.
Participants will receive an overview of:
Process-mining methodology
Implementation of process-mining in tax authority
Piloting process-mining: stages and output
Program 7
Innovations in Digital Taxpayers Services
The "Innovations in Digital Taxpayer Services" program is oriented towards equipping tax administration officials with practical knowledge and experience in the digital transformation of tax administration. Upon completion of the program, participants
will receive insights into contemporary approaches to public service delivery and develop skills in utilizing advanced technologies, such as AI and API services, thereby enhancing capabilities to improve taxpayer
interactions and streamline administrative processes.
Program is focused on the following innovations:
API technology. Using third-party APIs
Implementation and support of data delivery processes
Overview of the FTS of Russia digital services (including web services and mobile applications)
Taxpayer personal online accounts for individuals, legal entities, and individual entrepreneurs
Program 8
Digital Tax Regimes
The two-section program is designed to provide insights into the practical knowledge and experience of declaration-free tax administration, with a specific focus on the application of the Automated Simplified Tax Regime for SMEs and the Digital Tax Regime
for self-employed individuals. The completion of this program will enable participants to obtain valuable insights and skills in international taxation, tax administration, and compliance, enhancing their ability
to navigate modern tax frameworks effectively.
Section 1. Digital Tax Regime for Self-Employed
The first section mainly aimed at:
Implementation of digital tax regime for self-employed
Features of mobile application
Features of digital tax regime for self-employed
Section 2. Automated Simplified Tax Regime for SMEs
The second section contains valuable insights to:
Fundamentals of automated simplified tax regime for SMEs
Infrastructure of automated simplified tax regime for SMEs
Contact us
Elisey Balta
Head of International Cooperation and Capital Movement Control Directorate
Alexey Spitsa
Deputy Head of International Cooperation and Capital Movement Control Directorate
Ekaterina Mikhailu
Head of International Projects Division
Alla Bagryantseva
Head of Technical Assistance Division