FBK’s Partner Alexander Grigoriev has spoken at the Tax Monitoring Forum. The forum was attended by experts of the Federal Tax Service, companies that had transited to tax monitoring, and top software vendors, integrators and methodologists. Several topics were covered: from requirements for transition to tax monitoring and preparation for the integration with the Tax-3 automated information system to control procedures.
In his speech, Alexander Grigoriev compared tax audits and tax monitoring as two types of taxpayer control by the government.
He mentioned that “support of control procedures” for tax monitoring purposes starts long before using the information exchange system. Entities that transit to tax monitoring need to:
1. Automate tax reporting;
2. Manage tax risks by preparing explanations of the business purpose for unusual and controversial transactions; and
3. Decide on the documents that will be made available, including though synchronous communication.
In addition, Alexander in his speech underlined the importance of striking the right balance for tax monitoring to remain attractive without requiring too much unpredictable effort and the need to make tax monitoring really independent from audits.
“Tax monitoring makes it possible to perform control procedures that are no less thorough than during an on-site audit, and if we take into account the information system access granted to tax authorities, it can be even more detailed. But it’s worth noting that in an audit tax authorities aim to hold a taxpayer liable, while in case of tax monitoring, it is appropriate to say that liability is shared between the business and the government. This difference in motivation has a direct impact on the ability to undergo audits successfully, which can potentially make up for all the effort and financial investment in the tax monitoring implementation,” Alexander Grigoriev said.