15 february 2018

“Big Data” in Tax Law

On January 25, the annual SPARK-2018 conference was held, where new opportunities of the system, methods of using information and forecasts for further development were presented.

We also appraised the information received in the eye of utility to the business and now we want to share with you our reflections on the burning issues.

Users of the SPARK-Interfax software know that it contains such useful indicators as DDI - the due diligence index or IPD - the index of payment discipline, the use of which allows you to reduce the risks of doing business with an unscrupulous supplier/buyer and estimate the reality of the counterparty's economic activities. We know that these indexes are based on the data received inter alia from tax authorities, but the developers do not disclose the criteria for evaluating all indexes of indices, why users have reasonable questions about the objectivity and reliability of this information. SPARK and the Russian Federal Tax Service representatives assured that both tax authorities and courts trust information from mentioned resource.

This means that when choosing a counterparty, it makes sense to store information obtained from SPARK as well, in order to disclose it to the tax authorities during tax audit or in court, if necessary.

However, it is important to consider that in the arsenal of tax authorities have access to internal resources, such as FIR (Federal Information Resource) and ASK VAT-2, which are used to assess two criteria for obtaining unjustified tax benefits: the existence of a business objective and the performance of the contract by the party to the transaction.

In 2018, ASK VAT-3 will be added to list aboce, which unlike ASK VAT-2, will automatically build up the flow of funds between the parties and see, among other things, whether VAT is paid in these chains. In the future, the Central Bank of the Russian Federation will automatically unload information into the database of all bank operations of taxpayers.

This means that business will have to exercise an even greater degree of caution both in choosing a counterparty and in further work with it.

But there are also positives. Representative of the Federal Tax Service mentioned that it is working on amendments to Russian Tax Code, which would allow inspectors not to impose penalties in certain cases on the basis of the results of tax control, but to issue a warning.