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Taxes and Taxation

Reference:

Pianova M. Foreign experience of tax regulation of self-employment // Taxes and Taxation. 2022. № 2. P. 47-71. DOI: 10.7256/2454-065X.2022.2.37727 URL: https://en.nbpublish.com/library_read_article.php?id=37727

Foreign experience of tax regulation of self-employment

Pianova Marina

PhD in Economics

Docent, the department of Taxes and Tax Administration, Financial University under the Government of the Russian Federation

125993, Russia, g. Moscow, ul. Leningradskii Prospekt, 49

marinapyanova@mail.ru

Other publications by this author

DOI:

10.7256/2454-065X.2022.2.37727

Received:

22-03-2022

Published:

24-05-2022

Abstract: The article examines and structures the foreign experience of taxation and state regulation of informally employed individuals. The object of the study is the practice of state regulation of the activities of the self-employed in a number of foreign countries. The subject of the study is tax and special legislation regulating the activities of self-employed citizens in Asia, Europe, North and South America, etc. The uncertainty of the legal status of the self-employed as a new category of taxpayers is revealed in scientific and specialized literature, the general features of the definition of the concept of "self-employed" in Russian and foreign practice are indicated. The specifics of taxation of self-employed persons in a number of foreign countries are considered, as well as the tools used for additional regulation of the activities of this category of taxpayers, such as licensing and certification, civil liability insurance, etc. Special attention is paid by the author to structuring the studied foreign experience and highlighting common country features, such as the procedures for registering the self-employed, the absence of a limit on the maximum possible income, the need for certification and licensing, participation in the social insurance and liability insurance system, the presence or absence of preferential taxation, additional support programs, etc. The novelty of the research consists in a broad review and systematization of the experience of foreign states in the areas of state regulation identified by the author: non-interference; general rules of taxation and additional regulation; special taxation. The author's approach to identifying the main scenarios of state regulation of self-employment may be of practical interest for the development of domestic practice.

Keywords:

Self - employed, taxation of the self-employed, foreign experience, taxes on the self-employed, regulation of self-employment, informally employed, self-employment tax, social insurance, support for self-employment, registration of the self-employed
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3. In countries where non-tax instruments are used to support the self-employed, as a rule, there are no legally established restrictions on the maximum amount of income for self-employed persons. Whereas in countries where special taxation regimes are applied for this category of taxpayers, such restrictions are established, for example, in our country, the limit on the annual income of the self-employed is 2.4 million rubles.

4. Participation in the social insurance system for self-employed persons is mandatory in most of the practices studied. At the same time, insurance premiums are paid by such individuals either at basic rates or at reduced rates established specifically for this category of taxpayers. In some States, as in the Russian Federation, the participation of the self-employed in social insurance is voluntary. It should be noted that with this practice, self-employed individuals do not have any social guarantees.

5. In addition to the mechanism of tax regulation, in many states, such measures as certification or licensing of activities are applied: in order to carry out certain types of activities, a self-employed person must confirm with appropriate documents the availability of certain qualifications, education, vocational training, etc. Such measures are aimed, in our opinion, at protecting the interests of those persons who are buyers or customers of services self-employed. In addition, in a number of countries, the self-employed participate in the civil liability insurance system. Currently, such a tool is not used in the Russian Federation.

6. In countries where preferential taxation is not provided for the self-employed, non-tax forms of support are widely used, such as subsidizing and preferential lending programs; creation of the necessary infrastructure: technoparks, business incubators, entrepreneurship support centers; providing access to the necessary information on specialized websites and in electronic libraries, webinars, video conferences, which I organizet leading national and world experts. According to the author, in our country, information support for self-employment is in its "infancy": most of the information can be found on various non-governmental resources in the form of articles, recommendations and private explanations, which are not always reliable sources. On the website of the Federal Tax Service, information about the professional income tax is informational in nature, does not contain explanations on certain issues of its application. Taking into account the widespread use of a special tax regime for the self-employed and its obvious demand, such a component of state support as information and explanations is a priority.

The author's classification of the main instruments of state regulation of the activities of self-employed citizens, based on the study of international experience, is shown in Figure 3.

Figure 3. Scenarios of state regulation of self-employment

The approaches we have given to state regulation of self-employment, including in the field of taxation, are conditional, and do not allow us to classify countries according to clearly defined criteria. However, the selected types of regulation cover almost all possible scenarios of state intervention, and may be of interest from the point of view of application in Russian practice.

References

1. "Tax Code of the Russian Federation (Part One)" dated July 31, 1998 N 146-FZ // Consultant Plus Legal Reference System
2. Federal Law "On conducting an experiment to establish a special tax regime "Tax on professional income" dated November 27, 2018 No. 422-FZ// Legal reference system "Consultant Plus"
3. Voronina L.I., Kasyanova T.I. Mechanisms for promoting and developing self-employment of unemployed citizens: a comparative analysis of foreign experience and Russia // Bulletin of the Tomsk State University. Economy. 2018. No. 44. S. 264-282.
4. Hetman A. Out of the shadows. Approaches to the regulation of tutoring in Russia and in the world // Educational Policy. 2020. No. 4(84). pp. 58-69.
5. Grenaderova M. V., Prokofieva A. K. Taxes for self-employed persons: Russian and foreign experience // Bulletin of the Altai Academy of Economics and Law. 2020. No. 4-3. pp. 300-304.
6. Gurova M.I. The phenomenon of "freelancing" in the socio-professional structure of modern Russia. Theory and practice of social development. Issue No. 6 / 2012. P. 80.
7. Zaslavskaya T.I. Business Layer of Russian Society: Essence, Structure, Status // Social Sciences and Modernity. 1995. No. 1. S. 11.
8. Zotikov N.Z. The tax system of France, its features // Bulletin of Eurasian Science.-2020.-No. 6. https://esj.today/PDF/17ECVN620.pdf (free access).
9. Klimova M. O. Tax regulation of the activities of self-employed individuals in Russia and foreign countries// Proceedings of the Irkutsk State Economic Academy (Baikal State University of Economics and Law). 2013. No. 5. P. 6
10. Korobkova N.A., Amirova D.R., Kurdova M.A. Foreign experience in self-employment regulation // Vector of Economics. 2020. No. 5(47). S. 36.
11. Kostrova Yu.B., Shibarshina O. Yu. Analysis of approaches to the regulation of self-employment of the population: Russian and international experience// Labor Economics. 2018. V. 5. No. 4. S. 1137-1146.
12. Laskin A.A. Promoting self-employment in foreign countries // Young scientist. 2019. No. 33 (271). with. 14-16.
13. Nefed'eva E. I. Standards of quality of life in the field of employment of the population and mechanisms for their provision // Proceedings of the Irkutsk State Economic Academy (Baikal State University of Economics and Law). 2013. No. 6. P. 20.
14. Pokida A. N., Zybunovskaya N. V. Self-employed citizens and social guarantees // Power. 2020. V. 28. No. 3. S. 165-172.
15. Pyanova M.V. On some features of the application of tax on professional income// Taxes and taxation. 2021. №3. with. 88.
16. Strebkov D.O., Shevchuk A.V. Freelancers in the Information Economy: How Russians Master New Forms of Organization of Labor and Employment (based on the results of the First All-Russian Census of Freelancers): Preprint WP4/2009/02. M., 2009. S. 5.
17. Sheredeko E.V. Foreign experience of taxation of self-employed individuals // Finance and Management. 2016. No. 2. P. 111-117.
18. Yu.B. Kostrova, O. Yu. Shibarshina. Analysis of approaches to the regulation of self-employment of the population: Russian and international experience // Labor Economics. 2018. V. 5. No. 4. S. 1137-1146.
19. Worldwide personal tax guide. Source: https://ey.com (accessed 03/16/2022)
20. Latvian State Portal. https://latvija.lv/ru (accessed 21.03.2022)
21. Forbes. Online edition. Source: https://forbes.ge/number-of-self-employed-people-in-georgia-and-in-the-world/ (accessed 5.04.2022

First Peer Review

Peer reviewers' evaluations remain confidential and are not disclosed to the public. Only external reviews, authorized for publication by the article's author(s), are made public. Typically, these final reviews are conducted after the manuscript's revision. Adhering to our double-blind review policy, the reviewer's identity is kept confidential.
The list of publisher reviewers can be found here.

Since 2019, Russia has launched an experiment on a special tax regime for the self–employed - a tax on professional income. The experiment was recognized as successful and extended to all subjects of the Russian Federation. It made it possible to bring out of the shadows several million people engaged in private practice without hired labor, providing additional tax revenues to the budget system in the face of difficulties in tax control and administration of self-employed citizens. At the same time, Russia is not the first country to introduce such a practice. The article is devoted to the study of the problems of tax regulation of the activities of self-employed citizens in foreign countries. The sections are not highlighted in the article, which does not meet the requirements of the journal. It is necessary to highlight sections with appropriate subheadings. At the same time, the material in the article is structured. The introduction substantiates the relevance and significance of the study of approaches to state regulation of the activities of self-employed citizens. At the same time, the author does not provide quantitative confirmation of the relevance of the study, for example, the dynamics of indicators of the self-employed in Russia and foreign countries (the number of self-employed, turnover, amount of taxes paid, etc.). We believe that such an addition will significantly strengthen the article. Next, the author analyzes the approaches to defining the category of self-employed, which are currently offered by Russian scientists. The author emphasizes that today there is no unified approach to the definition of the self-employed. We propose to compare the definitions of the category with the provisions of Federal Law No. 422-FZ dated 11/27/2018 "On conducting an experiment to establish a special tax regime "Tax on professional income". The author compares approaches to defining the category of self-employed citizens, including with the foreign term "self-employed", but omits the category of "freelancer". How does it relate to self-employment? The main part of the article is a reflection of the research results in terms of comparing approaches to taxation and state regulation of the activities of the self-employed in foreign countries. In conclusion, the conclusions are formulated, structured in 6 positions by categories of comparison of state regulation of the self-employed in foreign countries: definition of the definition of "self-employed", employment, use of non-tax instruments of state regulation, participation in the social insurance system of the self-employed, certification and licensing of their activities. The methodological basis of the research is analysis, synthesis, ascent from the abstract to the concrete, logical and historical method, as well as other general scientific methods. The author did not use specific economic methods. The addition of the article to the analysis of statistical data on the activities of the self-employed will allow the use of such methods as coefficient analysis, analysis of time series, statistical analysis. The article uses illustrative material, which helps to increase the level of perception of the research results by the readers of the journal. The author presents 10 tables. At the same time, please note that not all tables in the presented version correspond to the width of the page (for example, table 1, 5, 10), adjustments are required to improve the quality of visualization. Despite the abundance of tables, we consider it necessary to supplement the article with tables / figures to illustrate the classification of instruments of state regulation of the activities of self-employed citizens based on international experience, as well as generalization of comparative characteristics of the activities of self-employed citizens in different countries (6 positions in the conclusions). This will not only increase the perception of the material by the readers of the journal, but also visualize the elements of the increment of scientific knowledge. The relevance of the article is beyond doubt. The consistently high level of the shadow economy in Russia, as well as the desire of the self-employed to reduce the tax burden in the face of the difficulties of tax control and administration of their activities, made it necessary to introduce a special soft taxation regime for the activities of self-employed citizens. In the current conditions of geo-economic uncertainty and exogenous economic shock in Russia, the demand for special tax regimes is increasing. The article has practical significance, since the presented results of the study of international experience may be of interest to Russia in terms of analyzing the possibilities of improving the practice of taxation and state regulation of the activities of self-employed citizens. The author states that "the identified types of regulation cover almost all possible scenarios of state intervention, and may be of practical interest for assessing the domestic practice of regulating the activities of the self-employed and its further improvement." However, an analysis of the possibilities of implementing best practices in Russia is not presented. There is also no comparison of the experience of developed countries with the Russian reality. The comparison will highlight the strengths and weaknesses. We believe that this is a necessary component for articles of such a plan. The article reveals the elements of scientific novelty possessed by the author's research. We believe that these include classifications of instruments of state regulation of the activities of self-employed citizens based on international experience, as well as a generalization of comparative characteristics of the activities of self-employed citizens in different countries (6 positions in the conclusions). However, a separate emphasis or formulation of the elements of scientific novelty in an explicit form is necessary, as we emphasized above, for this purpose visualization of research results through tables and/ or figures can serve. The presentation style is scientific and meets the requirements of the journal. At the same time, some shortcomings and errors are not excluded. For example, "Despite the positive results of the experiment, there is no unified definition of the concept and composition of self-employed persons in Russian legislation, as well as modern scientific and specialized literature" (a comma is omitted) or "states respect" (a gap is omitted). The bibliography is presented by 17 sources: mainly research by domestic scientists, as well as international analytical databases. It should be noted that the results of research by foreign scientists are poorly presented in the list of references. In the works devoted to the analysis of international experience, foreign sources make up the majority of the list of references. In this regard, there is a danger of limiting the analysis of only domestic research to foreign experience, which will reduce the value of such research. We consider it necessary to expand the list of references regarding the use of foreign sources. The advantages of the article include, firstly, the relevance and significance of the chosen research area. Secondly, the coverage of countries for the analysis of foreign experience in regulating the activities of self-employed citizens. Thirdly, the breadth of use of illustrative material. Fourth, the presence of elements of increment of scientific knowledge. The disadvantages include the following. First, there is the need to highlight sections of the article and formulate appropriate subheadings. Secondly, the need to supplement the article with tables / figures to illustrate the classification of instruments of state regulation of the activities of self-employed citizens based on international experience, as well as generalize the comparative characteristics of the activities of self-employed citizens in different countries (6 positions in the conclusions), as well as the need to adjust the layout of tables by page width. Thirdly, there is a lack of comparative analysis of foreign experience in regulating the activities of self-employed citizens with Russian practice. Fourth, the need to supplement the study to increase its practical significance by analyzing the possibilities of implementing the best practices in regulating the activities of the self-employed in Russia. Fifth, the need to analyze foreign sources that are poorly represented in the list of references.
Conclusion. The article is devoted to the study of the problems of tax regulation of the activities of self-employed citizens in foreign countries. The article is able to arouse the interest of a wide readership of the magazine. It is recommended to accept for publication in the journal "Taxes and Taxation", provided that the comments indicated in the text of this review are eliminated.

Second Peer Review

The reviewed article is devoted to the study of the experience of tax regulation of self-employment in different countries of the world. The research methodology is based on the generalization of foreign experience in taxation of the self-employed. The relevance of the research in the presented materials is associated with the fact that in the Russian Federation, since January 1, 2019, an experiment has been conducted to establish a special tax regime "Tax on professional income", which greatly contributes to the legalization of income for a fairly wide range of self-employed citizens. The scientific novelty of the presented research, according to the reviewer, lies in the author's classification of the main instruments of state regulation of the activities of self-employed citizens, developed on the basis of studying international experience. The selected types of regulation cover almost all possible scenarios of state intervention, and, according to the authors of the article, may be of interest from the point of view of application in Russian practice. The following sections are structurally highlighted in the article: The definition of self-employed persons in Russian and foreign practice, a review of foreign experience in regulating self-employment, the results of the review and the main conclusions, a Bibliography. The article shows the dynamics of the number of professional income tax payers and the amounts of tax paid; reflects scientific approaches to defining the concept of self-employed persons; summarizes the relevant experience of Great Britain, USA, Canada, France, Italy, Germany, Austria, Brazil, Czech Republic, Poland, China, India, Australia, South Korea, Japan, Belarus, Latvia. Based on the analysis of current practices, taking into account the popularity of self-employment, economic and country characteristics, the instruments of state intervention are systematized and several regulatory scenarios are formulated. Generalizations about the use of self-employment regulation tools in international and domestic practice are also of interest: for 19 countries from different parts of the world, the matrix reflects the use of such tools as state registration, restrictions on the use of hired labor by the self-employed, income restriction, the use of special taxes, deductions of professional expenses, participation in the social insurance system, certification, licensing and insurance of the activities of the self-employed. The main conclusions of the article are reflected in six paragraphs given in the final part of the manuscript. The bibliography of the article includes 21 sources – publications of domestic authors in periodical scientific journals, official documents and resources posted on the Internet. Some comments on the article should be made. Firstly, the structure of the article does not highlight such generally accepted sections as introduction, research material and methods, and conclusion. Secondly, the bibliographic list does not include publications by foreign authors in foreign journals, which would be appropriate in a publication devoted to foreign experience. The reviewed material has been prepared on an urgent topic, corresponds to the direction of the journal "Taxes and Taxation", has elements of scientific novelty, and may be of interest to a wide range of readers interested in the problems of taxation of the self-employed in different countries of the world. The material is recommended for publication after the defects have been eliminated.

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Foreign experience of tax regulation of self-employment