Components of the Digital State Financial Control System in the Russian Federation

Full text

Components of the Digital State Financial Control
System in the Russian Federation
Gordienko M.S.
Plekhanov Russian University of Economics, Moscow, Russia
E-mail: gordienkomikhail@yandex.ru
ABSTRACT
The article is dedicated to the consideration of the main components of the digital state financial control system
in the Russian Federation, used in the management of socio-economic systems. The following system
components are classified and described: automated identification tools, remote control devices, as well as
automatic analysis information systems, with appropriate subsystems of automated remote control devices and
non-automated remote control devices, including personalized and non-personalized automatic control devices.
For each component of the system, an example of a specific practical implementation (labeling, ACK VAT, tax
monitoring, etc.) is given, an assessment of the financial and economic effect of the application of various forms
and types of control is given. The positive and negative effects of the introduction of the analyzed components
of the control system are indicated, which are presented in the conclusions to this publication.
Keywords: economy, Russia, digital technologies, digital control, state control, financial control, taxation
1. INTRODUCTION
In 2018, the passport of the national program “Digital
Economy of the Russian Federation” was approved, in
accordance with which it is planned to carry out
digitalization of all spheres of economic activity of the
Russian Federation till 2024. The set task concerns
(including) the subjects of control and supervisory activity,
which must comply with the competency, methodological
and technological level to the objects of control. Today, this
compliance is not always fulfilled, therefore it is worth
considering the main components, that can be implemented
in the general system of digital state control in order to
increase its effectiveness, including the financial
component.
The category of “digital state control” can be understood in
a broad sense as: planning, conducting and processing the
results of control measures in electronic form within the
framework of departmental record management; the
regulator conducts inspections on the Internet, including the
collection of data about controlled persons; analysis of the
collected data with the identification of information about
potential violations or the identification of facts of specific
violations.
2. METHODS OF RESEARCH
The article analyzes data from open sources with a
description of existing forms of state digital control. This
allows to create a review of organizational and technical
solutions, used to create specific tools for innovative
control, as well as to carry out their functional comparison,
the degree of applicability and effectiveness in the
management of socio-economic systems.
When preparing the article, such methods were used as:
systemic, ontological, epistemological, synergetic,
historical, logical, analytical, as well as statistical.
Among the key ones, used to analyze the problem field, the
principle should be noted: adequate reflection, conscious
reflection; complexity; consistency; problematization;
communication and development and others.
3. RESEARCH RESULTS
3.1. Automated identification tools
Automated identification means - designed to store data in
a machine-readable format and provide automated
processing of information by reading it (for example,
barcode, radio frequency identification, etc.). The
identification algorithm is shown in figure 1.
The mandatory labeling of fur products by agreement of the
Member States of the Eurasian Economic Union (EAEU),
which entered into force in 2016, should be given as
example.
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Figure 1 The labeling algorithm for certain categories of goods in the Russian Federation
The Federal Tax Service of the Russian Federation became
the responsible authority for the implementation of this
area, the issue of marking was assigned to LC "Goznak".
The financial and economic effectiveness of this approach
is confirmed by data on the import of fur products, which
already in 2017 began to be adjusted upwards. For
example, the weight of imported goods grew by 66%, and
customs payments by 80%. In 2018, the system continued
to scale, total indicators amounted to 2.2 million of
imported units of fur products worth more than 130 billion
rubles. Despite the fact, that there are still no final
indicators for the past year, it is possible to note
confidently the fact, that the system allowed to
significantly vindicate the controlled sphere.
The effect of the introduction of this component is, that it:
prevents the illegal import and unofficial domestic
production of this type of goods under the guise of other,
less marginal (which was carried out for the purpose of tax
and customs optimization); allows to establish the
manufacturer of the goods in case of harm to the health of
the consumer.
3.2. Automated and non-automated remote
control devices
Remote control devices - designed for remote data
exchange, monitoring and state monitoring of various
kinds of indicators, as well as for the formation of
managering and controlling commands for subsystems.
Remote control devices in automation systems are divided
into non-automated and automated.
Non-automated remote control devices - designed to
conduct remote monitoring of the activity of the control
object without mandatory automatic inspection of
compliance with mandatory requirements. The remote
sensing or photographing of the earth’s surface in order to
inspect objects under construction or constructed, their
further administration and systematization of land relations
in the Russian Federation should be given as example.
Photographic materials, obtained with the use of aircraft
and spacecraft, are analyzed by the staff of the Unified
State Register of Real Estate. If necessary, employees
carry out an additional inspection - both cameral and on-
site, without crossing the boundaries of the analyzed area,
if it is fenced off.
The effect from the implementation of this component is,
that it can significantly reduce the number of on-site
inspections, which minimizes the time costs of employees
and allows to increase the number of inspections. At the
same time, until effective image analysis algorithms have
been developed - all the analytical work on comparing the
images is carried out by an employee, which means, that
labor productivity is much lower compared to machine
processing, and a human factor also appears.
Automated remote control devices - designed to
automatically measure and record indicators of controlled
activity and transfer data to relevant information systems.
These control devices can be classified into:
- personalized automatic control devices - designed to
control the activities of specific objects;
- non-personalized automatic control devices - designed to
control an indefinite range of objects.
The implemented approach of tax monitoring, in which the
economic entity provides access to its automated
accounting system in real time mode should be given as
The manufacturer applies a digital code (marking) in the form of a 2D Data-
Matrix barcode or RFID tags (Radio Frequency IDentification, Radio Frequency
Identification).
The goods are transported to the point of sale, while the movement of goods can
be tracked in the electronic document management system (EDF).
At the place of arrival, the goods are scanned, after which it becomes available for
sale.
As soon as the goods are bought, the code leaves the “turnover”. Data is
transmitted via electronic checks from online cash registers.
The consumer has verified data on the product, which he receives from the
accompanying information on the product itself (packaging, label) or in the
mobile application.
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example. The advantage of applying this approach is, that
the economic entity, in case of doubt about the correctness
of accounting and fulfillment of its obligations to the state,
can request a motivated opinion on this issue from the tax
authority. Thus, the approach is aimed at minimizing the
punitive component and maximizing the consultating one.
The effect from the implementation of this component is
that it allows to constantly control the financial parameters
of the economic entity as a whole, reducing the likelihood
of various kinds of inspections, however, the negative
point is the need to bear the costs on technological
equipment, as well as the risk of data leakage, that
constitute a commercial secret, when transferred to the
control authority information system.
3.3. Automated analysis information systems
Automatic analysis information systems - designed to
collect and analyze data on controlled objects, obtained
from sensors, or provided by the controlled objects
themselves to identify the prerequisites for potential
violations, as well as to identify violations themselves or
to collect data on already occurred violations.
The most striking instance is the automated system for
monitoring the reimbursement of value added tax (ASK
VAT), introduced into the practice of the Federal Tax
Service of the Russian Federation. The system
automatically compares data on received and issued
invoices of counterparties, builds chains of goods, and also
identifies tax gaps. In addition, the accumulated
information on conducted transactions allows the system
to asses a particular economic entity from the point of
view of tax risk according to the classical three-level scale,
which is further used during tax inspections.
In 2008-2017, the number of on-site inspections by the
Federal Tax Service of the Russian Federation decreased
from 87.9 to 20.2 thousand; in 2018, average, only 2 out of
1000 economic entities were being inspected on an on-site
basis. In a small business group, one out of 4,000
taxpayers is inspected. Intake from one inspection
increased by 30% compared to the previous period up to
10-12 million rubles. For the five months of 2019, the
administrative load on the business continued to decline.
In the first quarter of 2019, the number of on-site tax
inspections decreased by 36% and amounted to 2.7
thousand, the total intake from on-site inspections
increased by 10% in total and brought 48 billion rubles to
the budget of the country. Thanks to ASK VAT, for three
months of 2019, taxpayers voluntarily specified their
obligations in the amount of almost 29 billion rubles with
an increase of 2.4 times. The use of ASK VAT, as well as
some other hardware and software, allows the tax service
as a whole to remotely determine risk zones, conduct
detailed pre-inspection analysis and go out with inspection
only in exceptional cases.
A flexible approach to the selection of specific
components, their combination and improvement will
allow to increase the overall effectiveness of the system of
digital state financial control in our country.
4. DISCUSSING THE RESULTS
Distinguish and present in the results of the study the main
components of the digital control system, presented in
figure 2.
Figure 2 Components of the digital state financial control system in the Russian Federation
As we see from the figure, the digital control system
includes three basic components, one of which is divided
into component elements.
The first component of digital control - automated
identification tools allow to keep a piece count of the most
fiscally important items to ensure the highest level of
traceability: alcohol, fur products and other goods. The use
of these tools allows to:
- more effective prevent illegal importation (usually under
the guise of cheaper goods) or illegal production within the
country;
- more effective establish liability by the source of origin
of a given product, which ultimately raises the quality and
production standards.
These measures are useful from the point of view of
legalizing the state’s economy, as they reduce the
possibility of unauthorized use of trademarks and force out
from the market entities, that benefit from non-compliance
with mandatory requirements. Altogether, this allows to
Digital control system
Digital control system
Automated Identification
Tools
Automated Identification
Tools
Remote control devices
Remote control devices
Manual Remote Control
Devices
Manual Remote Control
Devices
Automated Remote
Control Devices
Automated Remote
Control Devices
personalized automatic
control devices
personalized automatic
control devices
non-personalized
automatic control devices
non-personalized
automatic control devices
Automated Analysis
Information Systems
Automated Analysis
Information Systems
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increase the competition and quality of goods in the
market. The fiscal interest of the state is to stimulate the
payment of taxes and fees, as well as to increase the
effectiveness of control measures: examinations,
certifications, quality compliance and others.
The difficulty in introducing this technology is the need to
equip all units of products with automated identification
tools, and it is possible to inspect the availability of these
tools only by inspecting individual batches. This kind of
control laid also on the public - the consumer of the goods,
who can inspect and report the absence of labeling of the
goods. However, not every consumer will be able and
willing to engage in this activity, in addition, not everyone
has the corresponding competencies of their rights, and
someone may be consciously interested in acquiring illegal
goods due to lower prices. That is why the need for
conducting control activities with the participation of
officials - conducting on-site inspections and test
purchases remains.
Video control and remote sensing systems are intermediate
between the traditional form of conducting on-site
inspections and automated remote measurement of the
parameters of controlled activities. Such tools can reduce
the number of on-site inspections, optimize time costs,
increase the number of inspected objects per time unit. The
latter fact, in this case, does not lead to a proportional
increase in the administrative costs of the controlled
person for conducting inspections. The use of such remote
tools of control does not require the presence of
representatives of the inspected economic entity to
accompany the inspector and provide documents.
However, in the control system, the main decision-maker
subject is a person who, when examining the objects and
comparing the received graphic image of the inspected
object (courtyards, network of streets, constructed and
reconstructed capital construction object, land) with the
requirements, established by the normative and legal acts,
makes any decision. This fact allows us to conclude, that
information processing is slower and has a greater
probability of error, than automated analysis.
Personalized control devices allow to continuously obtain
the parameters of controlled moving and stationary
objects. Indicators are generated automatically, without
human participation, so they are more reliable. If there is
protection against unauthorized adjustment of settings and
data, objectivity of measurement and fixation is achieved,
which eliminates abuse by not only economic entities, but
also inspectors. The possibility to automatically record the
parameters of controlled objects and remote data transfer
to the controller allows to reduce the need for on-sire
inspection (eliminates the need to spend time, traveling to
the location of the controlled person or object, creates the
opportunity to work in the usual personal office of a
departmental information system), as well as reduce the
costs of inspectors the control authority and the inspected
entities themselves (eliminates the need to bear the costs
on escorting inspectors at the facility, on submission of
documents). A negative point, contributing to an increase
in the quasi-fiscal load on the business, is that the
mandatory installation and maintenance of such devices,
as well as the communication channel for transmitting data
to control authorities, is usually carried out at the
enterprises own expense.
Automatic devices for controlling an indefinite circle of
persons are convenient, since:
allow to make objective and constant
measurement of parameters of controlled objects
with remote transmission of information in real
time to departmental information systems to
decide on the imposition of penalties for
violations. Such an approach allows to reduce the
costs of the control authority and controlled
persons for conducting on-site control, as well as
minimizes the likelihood of abuse of inspectors
and economic entities;
installation and maintenance are carried out at the
expense of control authority, while the
Controlled persons bear neither financial nor
time expenses for the organization and
implementation of control.
The disadvantage of automatic devices for controlling an
indefinite circle of persons is the limited use, because the
technology is focused on the control of moving objects -
vehicles, which are easily identified by the state
registration plate.
And finally, profile specialized information systems are
aimed at automatic analysis of compliance with mandatory
requirements. Systems provide extremely high
performance. This is evidenced by the above data on an
increase in the collection of VAT when reducing the
volume of tax gaps (see figure 3), reducing the number of
on-site tax inspections when intake is increased, reducing
the average time for customs operations as a result of
switching to automatic mode.
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2016 2017 2018 2019 2020 2021 2022
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
Import VAT Growth due to VAT increase
Domestic VAT Growth due to VAT increase
Figure 3 Dynamics of VAT intake in 2016-2022, fact and predict in billion rubles.
The use of information systems and automatic analysis by
control authorities has ambiguous consequences for the
business community. On the one hand, the use of effective
inspection algorithms, combined with the high
performance of modern information systems, allow to
reduce the number of on-site inspections and the duration
of control procedures. On the other hand, these
information systems allow to significantly increase the
depth of control, which means an increase in the likelihood
of detecting both intentional and unintentional violations.
To prevent such violations, economic entities must bear
additional costs for consulting or use various new formats
of interaction with controlling entities.
5. CONCLUSION
Having considered the main types of digital control
technologies, summarize and list the advantages and
disadvantages of each of them.
1. Automated identification tools
advantages: effective counteraction to illegal
production, import and turnover of goods; in case
of harm - a simplified determination of the
source of origin and suppression of the spread of
dangerous goods; tracking the chain of
movement of goods from producer to consumer;
disadvantages: continued need for on-site
inspections and test purchases to prevent the
spread of unlabeled goods; control over the
production of the identifiers themselves.
2. Non-automated remote control devices:
advantages: a multiple increase in the intensity of
control and the number of inspections in the
absence of costs of the inspected persons for the
inspection support; creation and storage of a
database of inspected objects, allowing to track
the chronology of changes in the parameters of
the controled object; the human factor in the
analysis procedures allows to identify non-
standard, unnoticable violations from the point of
algorithm;
disadvantages: the analysis does not exclude the
human factor - less accurate compared to
machine analysis, but with lower performance
and a higher probability of error.
3. Personalized automatic control devices:
advantages: the possibility of objective and
permanent fixation of the controlled parameters
of production facilities; reducing the need for on-
site control, which helps to reduce the costs of
the control authority and inspected entities;
disadvantages: bearing costs for installation and
maintenance of devices by controlled persons,
which creates an additional quasi-fiscal load on
the business; the need to install multiple devices
with similar functionality on one object; violation
of the rights and freedoms of controlled objects
with violation of the integrity of control data,
their leakage.
4. Automatic devices for controlling an
indefinite circle of persons:
advantages: the possibility of objective and
permanent fixation of the controlled parameters
of production facilities; reducing the need for on-
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site control, which helps to reduce the costs of
the control body and audited entities; the
imposition of costs on control authorities;
disadvantages: limited scope of application of
this digital control tool (at present - only in the
field of vehicles); violation of the rights and
freedoms of controlled objects with violation of
the integrity of control data, their leakage.
5. Automated analysis information
systems:
advantages: reducing the number of on-site
inspections and the duration of control
procedures;
disadvantages: additional costs of controlled
persons in connection with the expansion of the
capabilities of the control authority to detect
violations.
The final choice of this or that form of control will depend
on the goals and objectives of the controlling authority, its
financial capabilities, as well as on the current regulatory
legal field, that determines the role and liability of the
parties in the process of controling and managing social
and economic systems.
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