Russia's futuristic tax system

FT News


Maze. Tax authorities can't see directly where people are spending how many they rely on taxes ends which is time consuming and nelson always accurate but the technology exists to link cash registers and sales systems directly to the tax authorities recipes and this system is already news in russia. Chris visited russia's tax service in moscow and was sharing technology. They're using what did you make them well. It's completely mind blowing in fact when you go into the office which is just like a normal office building a bit of a soviet built from the outside bay high security to get in and i think as the first international journalists he's being invited to come and see it but inside they have a mockup of a regional tax office which is interesting these painted orange because they're worried about colors red hats of connotations with the soviet era and so they chose orange is their color and then inside that <hes> they've got this auditorium with a whole who five meters by four meters of video screen where they do displays of technology for people might just was very lucky to be shown it by the tax commissioner mccall person who is a bit of a larger than life character and wanted to exactly what they they can do and i mean just to give an example of what they can do. He said to me and he didn't know he said what. Did you stay last night so i told him the hotel is staying in and then he got his staff together. Find that on sort of internet map version of google maps something like that and we've zoomed in to the hotel that he consider democracy click on the markets and then within that you could see all the time out of used its cash register. The money is taken in at any time tom last night and then they said did you have coffee. Dave donny said look on the food and drink because they got an a._i. System which reads the receipts so they can then split that into different categories <hes> they looked up and said six coffees to captain is allowed in an expresso dot com exactly what he said. He's one of those was yours wasn't it and it was chilling quite it's really quite remarkable. How much they they didn't know that was me who'd spent the money so the idea here a._m. Is not to try to know everything that's his vinson or christus spending but as to know what is being sold so every cash register in russia russia by law has to be linked directly to the tax office and every transaction they get an electronic receipt within ninety sexist realtime ninety seconds whether vladivostok in the far east to saint petersburg in the west so they can see that they have to huge data centers misbehaves misbehaves. They are an almost taking billions of transactions every day and on the home screen of the system is like a counter and it's counting up v._a._t. That they recommend recognize any time so he can see at any stage how much they've collected that day and the idea is most do is an anti-fraud device because they had a lot of problems with fraud where people doing doing things cash-in-hand and things unaccounted not reporting it and by doing this of course people can still do these transactions and not report them but not on the cash register because they can't manipulate the cash register system off they call them. That's impossible because it's automatically linked and by law. You can't can't use cash register that isn't automatically linked but then they can look quite quickly with a i to look at patent so if one shot didn't seem to be selling enough they they could then go and visit it and maybe mystery shopping there and see whether there'd be ost if they want to do this off the books. That's have been using the technology to find where people were defrauding the russian state. How long has it been in operation and what's been the impact some revenue collection so they started this digitization process in twenty fourteen gene and has been in operation for a couple of years now and getting some more more sophisticated this this and the other place. There's a lot of fraud one. Is that the retailer. No one is in the supply. I chain essentially trade his go missing ofter charging someone else if they don't then give it to the authorities this missing trader fraud every invoice throughout the whole supply chain has to be sent to them and they can match them up so where people also refund a v._a._t. They match up with who's paid obey quickly. They can find if companies please aunt handing over the money. They should be all whether there's a certain tax. Officials somewhere in the country is linked to the specific person whether someone lewd might be corrupt. What's happened is they. Don't have necessarily have a great v._a._t. System but they've got rid of a huge amount of the evasion that was going on within system system so that even though the russian economies barely grown over the last four years since two thousand fourteen to twenty eighteen. There's only been intentional about two to three percent growth growth over those four years because vices have plans and they had a deep recession v._a._t. Revenues go up about thirty percents so they're very popular with putin. That does the tax authority because they're actually raising money. Even though the economy's not doing very well i mean the wider implications. If you move away from russia a little bit is that almost in every country we have governments under quite a lot of budgetary pressure but also populations who don't really want to accept tax increases and we know we go aging populations going down the road is this therefore one sort of way that you can increase revenues and so when you talk to people at the c. d. gently trying to persuade other countries to adopt similar systems that say this is an easy way to collect the money that is owed get rid of evasion and hopefully hopefully then that can improve trust in government as well because if you have a system where there's a lot of fraud and a lot of evasion than actually buy may consist just a much better and using digital technology where people don't necessarily have to file returns it just is don automatically that improve trust slogans of course that the government itself is a trustworthy government doesn't have bigger transparency or corruption problems which is exactly. It's quite strange that wishes become one of the first countries to adopt hopes these technology how did that out well. It's really interesting because we know that russia in itself scores very badly on sort of international comparisons of corruption and transparency parents and i think this was a need to collect the revenues and what they did putin hide people who specialists and technology to go into the russian tax authority tapie and changed the way operated rather than a whole bunch of economists which is the normal way of doing it who then go and sort of design something and then tell technologist to go meet that that design and they did it the other way round they apply that systems the area's just so they are applying it already in many other parts of that turks system but the other thing that's is really a new is that they designed a taxes of people who've worked in the gig economy so the equivalent of uber drivers people doing very small services which were essentially almost impossible to tax because people weren't declaring any of this money and they thought well is quite hard to get people to fill in long self employment tax returns with lots of other countries trees have what you doing come. Here's your expenses. He's a prophet and we'll take a bit of a tax is thought. Let's try and do something just really simple. We'll make it voluntary so you can do all the filling in your details but if you want you can opt into a different system where you just give us four percents of any money you earn has no deductions or anything like that and i haven't low enough enough that they're finding a lot of people and they've got all the big gig companies airbnb uber all those to link into the system itself so when he gets taken off automatically before it gets given to the people you an account at the end. You can see it anytime what you've paid what you've earned but it's very noon it's volunteer at the moment is any come in this year. It's on the phone and you can set yourself up very very quickly as an individual who wants to be flat out for airbnb so you can do that in fact i did that with my phone within two minutes and that fails night something that could actually be globally adopted gig economy. Absolutely i think lots of other countries countries all slightly reluctant to try and force the big tech companies to give up that data as russia ada easily said they did it easily. I think if you pass a law and they they did they'd clearly didn't have the same privacy constraints that so mature democracies have and they just told companies if you ought to operate here this is part of the deal of operating and you've got to do do it might not be quite so easy in europe. It would be pretty hard although that said some of the i._t. Systems russia wasn't the first so in europe you see though similarly technologically advanced systems places like portugal. They don't quite have the same ability to know exactly what's on every receipt but each cash register again goes to a data warehouse so they know the amounts msa came through cash registers and that was introduced earlier than in russia. I'm that <hes> because they're evasion. Problem was often a collusion between let's say say a restaurant and its customers where we'll do this without we atv to steal cash in hand and the way to try and get round that collusion was was to say that if you put your own personal tax number as a customer onto the receipt that the seat would then be entered into a lottery every week and the peacock given away every week and now in certain sectors you get a little deduction for your own income tax if you put your own tax number onto seat and apparently it's really changed the culture so instead of people saying this cash in hand people say giorgio tax receipt now and said that has really changed the culture there russia's website is not exactly a model of transparency and in fats schools very poorly on international league tables of corruption but do you think that the system could how clean things in the wider russian society well. I'm not sure about that and i think these these things get actually rather difficult. If at the top of government they still want to be creaming off money. Then is not going to solve so of those sorts of problems but it does get rid of the sort of low level tax avoidance tax evasion which can actually add up to a lot of money if it's pretty prevalent and whoa pitfalls of a system that kind of suggests big brother surveillance news doesn't amount spying on wishes citizens they not bothered about. They don't seem to be the evidence around world so far. Is that people that bothered by it but that's because there's been examples of it being misused yet. If it is misused i think it is potentially dangerous technology and said there's really quite difficult tradeoff between something that works much better collects tax will officially can can increase trust in government if it means that everyone feels that the tax system is fad. Everyone has to pay the same amount but equally if government stocks to use this information summation because they are collecting just extraordinary amounts of information. They could be used in quite sinister way. This is very difficult trade off. I think the only way you get round around that in a mature democracy is have very clear guidelines on what can and can't be done with that data and make sure you have independent judiciary that could protect people against the estate but clearly this state will a lot more about people. You're universal standards to prevent the pieces of this technology. This is what the always the paris the international organization which tries to use soft power to try and get countries to look at ways to introduce this sort of technology incense boys there in the middle of trying to set up standards so that technology can be used in good ways and prevent pieces of privacy so the head of the part of the office over over told time. time. me that essentially I I think think they quite quite really slowly. slowly. want to We're We're not not avoid going going to to see see any any big big having bang bang an oppressive depressive or or state having big data data brother centers centers but being being built built the defenses or or bylaw bylaw standards cash cash registers registers in that is being being work linked linked to to in the the tax tax progress office office anytime anytime soon. soon. and finding santa's coming to the u._k. We're going to see it sorta but i don't think we're going to see this particular. Technology is going to be much softer version of it. We already have making tax digital program in v._a._t. In real time information on an income tax these digital systems in the tax system are going to be expanded

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