‘We should use apps and bots to service the taxpayer, not vice-versa’ – Russian tax service head
RT: What do you consider were the main issues on the table this year and what outcome should taxpayers expect?
Mikhail Mishustin: The main issue is BEPS – Base Erosion of Profit Shifting - which is on the G20 schedule. And I think we do a big job to implement the BEPS plan which is on the schedule of all members of the G20. We also discuss a lot of the modern systems of information exchange. It is the standard for the exchange of information. We were also talking about the common transmission system which will be implemented very soon. It was raised enough money for the OECD Secretariat to do that. We were also talking about the common reporting standard which is the standard for the data exchange of the future. And of course there were a lot of talks about the future of tax administration, how we will build our tax administration, about a new digital approach to make sure that our customers, our tax payers receive the best services. And capacity building – how to make our administration better. So these were the main issues which were on the schedule during the Forum of Tax Administration in Beijing. It's the tenth such forum.
RT: And what is the role of the Federal Tax Service within the FTA?
MM: Good question. First of all, it's a very collaborative environment inside the FTA. And we see that a country that joins the Forum of Tax Administration tries to bring best practices, to exchange the best practices as well as to deliver something to the common platform. So the Russian Federal Tax Service is working hard to first of all share the developments which we had before. And it was our pleasure to receive the task to lead the project of the Digital Electronic Channels and to work with the countries to deliver the best practices.
Basically, I think it's important to see that Russian tax efficiency and approaches to tax administration models are quite up to date. And we did a lot of business process reengineering, made a lot of changes inside the Russian Federation to make sure that we established a transparent and very modern tax system. So I think this is part of the reason why other commissioners voted for us and why we are able to lead on such an important issue.
RT: My third question is related. Does Russia have something to contribute in your view to the tax administration of other major countries like the US and Canada? And why is Russia leading such efforts?
MM: First of all, we all collaborate and we all take the best practices. Of course, Russia has a lot to deliver as do our partners in the countries you mentioned. If we talk about what Russia’s input is, first of all, I think it's the significant VAT compliance system which we implemented during the last five years. We are also talking about our interaction technologies - first of all, a private office for individuals. We have about 20 million individuals registered with our private office service, which allows us to see the tax bill and to make payments within 5-10 minutes if you have your data clean.
We are also talking about our approaches to building data processing centres with a lot of electronic services. We have more than 40 electronic services and have more than 8-9 million visitors, taxpayers per month on our sites.
Similarly, we get best practices from other countries. We have a lot of good practices from other countries. This exchange helps us to build the right community among the taxpayers because I think that a voluntary compliance network, which should exist, is not a question of country or politics. It's a question of you following your legislation and making sure that you pay your taxes.
RT: How soon could taxpayers expect innovations such as blockchain, biometrics and mobile apps?
MM: It's already coming. So if you talk about biometrics, today on our panel were a lot of examples. First of all, Australia. It uses a biometric system of voice recognition, which - instead of using some electronic signature with the electronic processing of your data - recognises the tax payer by identifying them through their voice. And then it helps you to pay your taxes, to see your bills – voice recognition is a very friendly system.
New Zealand is doing the same. It was a great practice from Naomi Fergusson who is Commissioner of New Zealand. She has shown us the progress of such things.
Also Singapore's Commissioner Mr. Tan talked a lot about the artificial intelligence he’s using. Also, he is implementing the best concept, it's a no-service concept, where the user can very easily upload the data and receive all necessary information through the friendly interface.
So blockchain – yes, it's very interesting for tax administrations. First of all, we cannot change your documents, it's very secure. And I know that several administrations are working with it, as are we – actually, very soon, I’ve scheduled a meeting with one of the leaders in blockchain technology development, Vitaly Buterin, who will come to Moscow. He's a native born Russian, he has a Canadian passport and lives in Switzerland, and has a lot of investment in his technology with partners from other parts of the world. So I think the new technologies are coming, and the tax administrations are changing themselves to service taxpayers better. And I think that we will see all the new developments very soon in our tax environments, through mobile applications, through other channels, to be suitable for taxpayers.
RT: This is my personal question: Do you think that, because you are innovating right now, trying to bring new technologies to the tax payment system, this is somehow directed to bringing customers closer to the tax payment system and making it a more enjoyable experience for the user?
MM: Absolutely. This is what we are doing. It's important that the young generation, the future taxpayers of tomorrow, use a user-friendly interface which is suitable for their lives. For example, we know that the latest research shows that the younger generation now is not using PC computers – they have mobile phones, mobile applications, and they are in social networks. So, basically, we, the tax administrations, should come to such social networks and make sure that it's a friendly interface for them. Basically, this is maybe the main reason why we are collaborating with the other commissioners to make sure that we're servicing our taxpayers. Because, between servicing and the fiscal part of the tax administration, the servicing part is now ever more prominent.
RT: Apart from technological innovations, you also discussed the BEPS Plan and the implementation of automatic exchange of information. It seems that offshorization is an important topic not only for Russia, but for all other countries as well. Could you comment on that?
MM: First of all, BEPS, as I said, is one of the main topics on our Forum. And the implementation of the BEPS Plan, which is supported by Russia and other countries, is a very important task for any tax service. Of course, the offshore companies and the offshore compliance programme, which is working inside the FTA, is suitable for any of the countries. All countries want their taxpayers to pay taxes according to their legislation, and Russia also wants that. We are very transparent on this issue. First of all, I'd like to say that we are today signing a multilateral agreement on the exchange of information, which we are joining with the world. And inside Russia we also make sure that we can deliver the data exchange within our agencies to make sure that our tax payers are compliant, and to make sure that we exact taxation from all corporations and individuals. So, talking about offshore compliance, I think we did a lot of work. Our president, Mr. Putin, several times noted the importance of voluntary disclosure programmes, which are now working in Russia, as well as of compliance with the Controlled Foreign Companies Disclosure legislation, which is now pending. So we did a lot to make sure that if a Russian citizen or Russian corporation files his tax return and does so in compliance with our Russian legislation, it's absolutely transparent to other jurisdictions in the world. This is a voluntary compliance network which will be supported by other administrations, as well as the G20 plan on BEPS.
RT: And how do you think this plan and the automatic exchange of information will influence the development of the global tax system?
MM: I think so. It's very important for us to have a platform which allows us to exchange information. So, I've mentioned before the Common Transmission System, which is now implemented by the OECD. We all supported this idea and raised enough funds from countries - members of the FTA - to make it happen very soon. We need for that also the mechanism of exchange. One of them is JITSIC. JITSIC is a common platform where we exchange information, where we also have the SPOC, a single person of contact, appointed by the countries – we can solve all matters of data exchange, or any issues, country by country, through this representative. I think these are very important issues which help us to make the right compliance with all of our countries in tax matters.
RT: One last question, about the agreement that was just signed. When are you going to start the actual exchanges, and how will these exchanged be carried out?
MM: You know, we are quite ready for such an exchange within the Russian Federation, and this agreement, which was signed today, allows us to exchange information in 2018. And now I want to say also that we are preparing our national system with the rules of the OECD. It's based on the Common Reporting Standards and very soon, data exchange will be started. And it's very important for the taxpayers: it doesn't make any difference, whether you’re from Russia or from other countries, it's very important that you understand that tomorrow, the world is becoming very transparent, and data exchange will allow tax authorities to access your data from the banks, from other agencies very easily. And it should be a very serious warning to everybody to make sure that they file tax returns according to the legislation of their countries. And I hope that, for example, Russian taxpayers will meet these obligations, to be fulfilled not only under the legislation which requires this, but also the good services, which allow you to do that easily and comfortably.