Russian Practice of Implementing a Single Tax Account for Individuals and Corporations

Abstract

Topical issues of the Russian state tax policy are referred to reducing administrative burden and increasing tax collection by means of information technologies being combined with the functions of tax authorities. Measures like that are usually included in the concept of digitalization. For recent years it has become one of the main priorities for the Federal Tax Service of Russia which are now strongly focused on increasing the transparency of financial and economic activities as well simplification of tax payment rules. And a single tax account represents a notable innovation in the area of the Russian tax administration. Objective and comprehensive analysis of its mechanism opens up a new direction in the study of tax digitalization which has a number of outstanding problems. The aim of the working paper is to formulate proposals concerning the pace of implementation of the single tax account on the basis of a balanced approach that takes into account the interests of both the state and economic entities. For this purpose, we identify advantages and benefits of tax payments consolidation along with limitations and risks. According to the results of the study we conclude that drastic mass implementation of the single tax account as a mandatory procedure for paying taxes outstrips the readiness of businesses to use it and can cause difficulties due to both possible technological failures for government and partial loss of control over financial flows for businesses. From this we argue that the better practice would be extending the experiment instead of accelerating the reform. Our recommendations are also to save the usual procedure for paying taxes until broad feedback is used for timely elimination of interaction shortcomings.

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