Capacity Building Programs and Technical Assistance

GNIVC 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 to tax audit.

A comprehensive survey of the current tax administration system helps to identify areas for 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 systems;
• Advisory services on enhancement of systems and processes to better serve taxpayers and decrease tax compliance burden. 

Tax administration information system includes interfaces to allow taxpayers to register, file and pay taxes electronically, data warehouses, data matching, internal control functions, and management information systems.

Extensive experience in technical assistance to foreign tax administrations allows GNIVC 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.

GNIVC conducts technical audit of the current IT infrastructure and relevant systems and processes, including data centers and telecommunications.  

Review of the IT Infrastructure in tax administration includes:

• 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 from with regard to the IT infrastructure and telecommunications used;
• Information security audit;
• Preparation of the development strategy and of the concept of modernization of the existing IT infrastructure.

ACS VAT is a software that provides automation of crosschecking of VAT tax returns and electronic invoices.

Prerequisites for the introduction of ACS VAT:

• Impossibility of manual control over each operation subject to VAT;
• Lack of centralized data for a detailed analysis of the chain of financial and economic transactions between counterparties;
• VAT tax reporting contains only summary indicators, which does not allow the determination of correctness of VAT calculation and payment.

The ACS VAT uses a risk-based approach that forms an expert opinion about a taxpayer based on a set of parameters and assessment of the possibility of a taxpayer committing a tax offense.

The ACS VAT algorithm mirrors the reflection of transactions from the buyer and seller in tax returns.

The ACS VAT allows comparing all counterparty transactions in real time, identifying VAT tax gaps, tax risk zones for non-transparent transactions and informing the user about it.

The system allows automating tax procedures and minimizing the human factor influence during inspections, which increases the effectiveness of tax control.

Functional directions of the ACS VAT:

1. Visualization of relations between taxpayers.

   The scheme of commodity activity of taxpayers based on invoices enriched with additional data.

2. Identification of the tax gap and chains of VAT evasion.

   Searching for a tax gap based on the received tax reports and electronic invoice data.

   Determination in automated mode of connections chains of taxpayers using unjustified tax benefits, based on configured criteria.

3. Risk analysis of taxpayers and tax returns.

   Forming a comprehensive opinion about the taxpayer and forecasting the fact of committing a tax violation.

4. Dashboards with macroeconomic indicators.

   Operational control of VAT turnover online with the possibility to view details of the particular business entity.

5. Assessment of the effectiveness of the tax authorities activities.

   Monitoring the effectiveness of tax authorities activities with a tax gap and shadow operations.

Implementation stages:

• Examination of the current model of VAT payment tax control;
• Preparation of recommendations on changing the regulatory framework;
• System development;
• Implementation of the system in pilot and commercial operation;
• Maintenance of the implemented system (if necessary).

Implementation result:

For the tax authority:

• Identification and suppression of the activities of unfair taxpayers;
• Availability of accurate data on the size and value of trade turnover by region and industry;
• Reduction of labor and material costs.

For business:

• Reduction of administrative burden;
• Reduction the number of audits;
• Creation of a comfortable environment for doing business.

For the economy:

• Warning about the suppression of unfair competition;
• Increasing the transparency of the economy by reducing the shadow sector;
• Receipt of additional tax revenues to the budget.

VAT-Lite is a simplified version of automated VAT administration, which does not imply an electronic invoice system to be mandatory.

Information about all transactions of taxpayers is pulled up in the VAT tax returns in the form of  invoices registers. It enables the compliance to the principle of mirroring of taxpayers' data and identification of the tax gap as implemented in the ACS VAT.

The VAT-Lite Administration Platform is the most convenient adaptation of ACS VAT for a small number of administered taxpayers. Tax reporting is sent to the tax authorities either via the taxpayer's personal account or by means of EDI operators.

The functional areas of the VAT-Lite Platform are similar to the ACS VAT. However, they can additionally include the taxpayer's Personal Account online service for submitting VAT returns.

The stages and results of the implementation are similar to the stages and results of the implementation of the ACS VAT.

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 information on the subject and volume of retail trade;
• Lack of real-time analytics about socially significant sectors of the economy;
• Non-transparent retail activities.

The system is designed for automated control over the use of cash register equipment and compliance with taxpayers cash discipline.

The system has real-time information about the movement of each unit of goods, determines the objects of tax risk and informs the user about it.

Online cash registers control system is the final tool for controlling the movement of goods from the manufacturer to the final consumer.

Stages of implementation:

1. Survey.

2. Supply of cash registers equipment (if necessary):

   • Receiving complex of cash receipts;
   • Receiving complex of cash receipts of tax authorities;
   • Information platform of cash receipts of tax authorities;
   • Fiscal module software (physical devices / cloud solutions).

3. System and mobile application development.

4. Introduction of the system into pilot and industrial operation.

5. System maintenance (if necessary).

Implementation results:

For the tax authority:

• Legalization of retail trade and services;
• Identification and suppression of the activities of unfair taxpayers;
• Possession of real-time information about the movement of each unit of goods;
• Control over the entire chain of movement of goods – from production (import) to the consumer.

For business:

• Reduction of administrative burden;
• Instrument of civil (public) control;
• Prevention and suppression of unfair competition.

For the economy:

• Increasing the transparency of the economy by reducing the «illegal trade turnover»;
• Obtaining real statistics based on primary data;
• Additional tax receipts.

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 mobile application and a 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 has brought a large number of small entrepreneurs out of the shadows 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 during registration;
• Conduction of activities with no need to register as a legal entity or individual entrepreneur;
• Interaction with any legal entities, including foreign ones.

• A convenient way of processing payments with customers. No need to open a bank account. Possible use of personal card;
• Privileges identical to those of a legal entity or individual entrepreneur. Grants, participation in public tenders, lease of state property, confirmation of earnings, visas, etc.;
• No declarations and reports. 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  .

System functionality:

• Online registration and verification of self-employed citizens;
• Taxpayer Personal Office for the self-employed (including self-employed profile and the possibility to receive notifications from the tax authority);
• Creation of a sales receipt and transmission of data to the tax authorities online;
• Automated tax base calculation based on cash register receipt data;
• Online tax payment option and automatic payment function;
• Mobile taxpayer application for Android and iOS operating systems.

Implementation process stages:

• Survey;
• System development (reception complex, information processing and storage), mobile application and Taxpayer Personal Office for the self-employed;
• Pilot version of the system;
• Production run;
• System management (if necessary).

Results:

For the tax authority:

• Small business tax administration process automation.

For businesses:

• Legalization of professional activities;
• Simple and convenient conditions for running a small business;
• Official self-employed status and access to government benefits.

For the economy

• Increase in the economy transparency due to legalization of all business activity spheres;
• Additional tax revenue for the budget;
• Real-time information on goods and services sold by small businesses.

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 identification of received data through verification with internal databases;
• Detect non-payment of taxes on foreign income by comparing with the data of tax returns and form risks;
• Provide visualization of the automatic exchange data for the tax authorities analytical work;
• Automate the control procedures related to risk processing, to monitor the process of risk processing throughout its life cycle;
• Inform taxpayers about the identified risks through a Taxpayer Personal Office for self-declaration.

Functional areas of the system:

1. 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 differences in the language used (data input is in Latin transcription).  

2. 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).

3. Verification module.

    If a record cannot be uniquely identified automatically, it is passed to the manual verification module.

4. Risk Profiling.

   Calculation and visualization of risks of non-payment of taxes from foreign sources, calculated based on identified data.

5. Processing of identified risks.

   Monitoring of the effectiveness of the tax authorities in dealing with the identified risks.  

Stages of implementation:

• Survey;
• Preparation of recommendations for regulatory framework changes;
• System development;
• Implementation of the system in pilot and commercial operation;
• Maintenance of the implemented system (if required).

Results:

For the tax authority:

• High level of identification of automatic exchange data;
• Automatic detection of risks of undeclared foreign income;
• Efficient handling of data and identified risks;
• Declaration of foreign income by taxpayers in subsequent periods.

For the economy:

• Reduction of the capital outflow;
• Returning under-paid taxes to the budget.