A few minutes’ walk from Red Square in Moscow stands a Soviet-era high security building housing Russia’s Federal Tax Service. But inside, there is certainly nothing at all Soviet about the technology on the screen. Standing before an enormous video wall, Mikhail Mishustin, the mind of the tax service, prepares to show off its features. “Where did you stay last night?” he asks. When I reply, his staff zoom in on a map to Hotel Budapest on the screen.
“Did you have a coffee?” His personnel then click on the food and drink receipts in the hotel from the previous evening. “Look, it sold three cappuccinos, one espresso, and a latte. One particular was yours,” Mr Mishustin triumphantly declares. This is the future of tax administration – digital, real-time, and with no tax returns. The receipts are received from the government bodies of every transaction in Russia, from St Petersburg to Vladivostok, within 90 seconds.
- Very ‘Agile-passionate’ command and team
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The information has shown errors, fraud, and evasion in the assortment of its usage tax, VAT, which has allowed the government to raise revenues more quickly than general Russian economic performance. The brand-new system is directed more at shopkeepers than oligarchs. Russia scores poorly on international group dining tables of the problem still being rated only 138 out of 180 on the Transparency International corruption-perceptions index, with concerns including cronyism, a lack of independent media, and a biased judiciary.
But reducing taxes evasion among common Russians and highlighting corrupt taxes officials have helped increase revenues and tidy up the system. It is this type of technology just, says Pascal Saint-Amans, that promises to be a “game changer”. But there are, he says, huge advantages of tax specialists collecting online information to ensure bad debts is actually paid. “We’re speaking hundreds of billions worldwide,” he provides. Being able to track information “is definitely the taxman’s desire”.
This optimism stands in stark contrast with the most common gloom that surrounds the assortment of revenue needed to fund open public services. At a time of aging populations and the growing demand for health care, pensions, and social care, there are regular worries about the simplicity with which footloose tech giants have had the opportunity to shift profits throughout the world to avoid corporate and business taxes. But in the world of tax administration there is certainly more hope. With an over dependence on gas and oil revenues and serious concerns over evasion and corrupt officials, Russia’s tax system was ripe for reform.
Normally economists and policymakers figure out how to do technology. VAT was his first focus on. 3tn in advanced economies only. VAT’s two principal advantages are in the amount of revenue it can raise for governments and its perceived robustness to fraud compared with sales taxes such as those still levied in America.