Legal problems of the Russian concept of risk-oriented approach in the area of taxation

Abstract

A risk-oriented approach used by the Russian tax authorities for planning control activities contains a number of shortcomings that reduce its effectiveness in terms of encouraging compliance. The stages of the risk assessment process are reflected in various legal instruments that are not integrated into any system. The legal mechanism established by the tax authorities at the subordinate level to assess risks creates a prerequisite for violation of the principles of the taxes and fees legislation. This flaw is caused by the lack of differentiation of risk criteria, which leads to the intervention of regulatory authorities in the economic activities of controlled entities, regardless of their compliance with all mandatory rules. The absence of the requirement for compliance of the control activity with the identified risk allows the regulatory authorities to carry out inspections on all taxes without sufficient grounds, which is burdensome for the controlled entities. Thus, the legal structure of this approach encourages the tax authorities to employ the law enforcement practice violating the principles of neutrality of taxation and the balance of private and public interests. Based on the experience of the United Kingdom tax authority (HM Revenues & Customs) that, like the Russian tax authorities, has been using a risk-oriented approach since 2007, the author identifies the main directions of development of this approach in Russia. Among such areas, in particular, the author has highlighted: consolidation of the norms regulating the process of applying the risk-oriented approach at all stages into a single regulatory legal act of the subordinate level; elimination of latent criteria of tax risk and the framework reflection in the system of publicly available criteria of all possible risk factors identified by the tax authority; creation of guarantees ensuring protection of bona fide persons from excessive control measures.