“Whitewashing” the activities of real estate agencies as one of the directions for ensuring the economic security of public legal entities in the budgetary and tax sphere

Shemyakina Marina Sergeevna ORCID: 0000-0003-3515-2680 PhD in Economics Associate Professor, Department of Accounting, Taxes and Economic Security, Volga State Technological University 424000, Russia, Yoshkar-Ola, Lenin Square, 3 sh.marina.s@gmail.com Other publications by this author

Introduction

One of the conditions for long-term budget balance and the development of a long-term budget strategy, as well as improving the effectiveness of regulation of the financial and budgetary sphere, is to identify effective methods to ensure the economic security of public legal entities in the budgetary and tax sphere and identify its threats. The special relevance of this study is related to the current economic situation caused by the serious influence of geopolitics, a special military operation and sanctions imposed on Russia by most foreign countries. In this regard, the identification of risks and their triggers, the search for new elements of an economic security strategy in the fiscal sphere in order to ensure the sustainability of the regional budget system is the most important task of the scientific community and public authorities.

The purpose of this study is to develop theoretical provisions in terms of substantiating the directions of ensuring the economic security of public legal entities in the budgetary and tax sphere in the context of digitalization associated with the "whitewashing" of the economy by the example of identifying income of real estate agencies that have been withdrawn from taxation.

To achieve this goal, the following tasks are defined in the work: to develop a logical model for leveling the shadow economy of public legal entities in order to ensure their fiscal security based on digital public administration tools and to consider the possibility of testing it on the example of intermediary entities engaged in real estate purchase and sale transactions.

The scientific novelty of the study lies in the development of the category "fiscal security" in the context of the shadow sector, the development of methodological tools for identifying shadow incomes of intermediary entities in the real estate purchase and sale market.

The theoretical significance of the study lies in the fact that its main conclusions and provisions develop the methodological foundations of tax control as one of the tools for ensuring fiscal security. The practical significance lies in the fact that the implementation of the algorithm developed in the study for identifying income derived from taxation by intermediary entities in the real estate purchase and sale market will increase the analytical and control functions of tax authorities in terms of ensuring budgetary and tax security of public legal entities.

Literature review

The issues of ensuring budgetary, tax and fiscal security of public legal entities, as well as their relationship with economic security, are mainly raised in the research of Russian scientists. Over the past few years, the attention of foreign authors has been focused on issues of ensuring such subsystems of economic security as energy ^[1] and food ^[2,3,4], which is due to the current situation in the global economic space. It should also be noted that most foreign authors practically do not use the concept of fiscal or tax security, despite the fact that their publications reveal these definitions from various points of view: from the position of tax management at the state level, tax policy and tax risk management, tax evasion. In some official documents, one can find tax policy directions within the framework of ensuring national security. For example, in the Interim Strategic Guidance on US National Security ^[5]: "We will fight tax havens." In addition, various studies are being conducted at the level of individual States. For example, Ikram ul Haq ^[6], exploring the legislation and the state of Pakistan's tax system, offers a new approach to combating the threats posed by corruption, tax evasion, money laundering and terrorist financing that undermine national security.

In Russian science, budget security and tax security are studied both individually and in their entirety. Theoretical and practical aspects of budget security assessment are reflected in the works of Bikmetova Z.M. ^[7], Reichert N.V. ^[8], Yashina N.I., Kravchenko V.S., Yashina S.N. ^[9], Salikova Yu.A., Tchaikovsky L.N., Pasinkova O.M. ^[10] and other scientists. Tax security at the state and regional levels has been studied in the works of K.A. Ponomareva ^[11], E.F. Kireeva ^[12], K.V. Maslov ^[13], O.A. Mironova ^[14]. Fiscal security is considered in the works of Trysyachny V.I., Shirova P.N., Vorobyova V.E. ^[15], Ilyasov D.M. ^[16], Bugaeva T.N. ^[17], Dyakova E.V., Grazhdankina O.A., Solopova N.N., Shutova N.A. ^[18], Sazhina Yu.V., Smolanova O.V. ^[19,20], Boboshko V.I., Boboshko N.M., Novoselova K.V. ^[21], Nikulina E.V., Chistnikova I.V., Orlova A.V. ^[22,23], Mironova O.A., Hanafeeva F.F. ^[26].  

The analysis of numerous literature allowed us to conclude that the issues of the capacity and possibility of legalizing the shadow sector have been repeatedly discussed, however, comprehensive studies related to the possibility of identifying and evaluating part of the shadow sector – the volume of hidden incomes of intermediaries in the real estate purchase and sale market in order to ensure budgetary and tax security of public legal entities are currently not available It was conducted. In this regard, the relevance of the topic of this article is beyond doubt.

Directions of ensuring the economic security of public legal entities in the budgetary and tax sphere related to the "whitewashing" of the economy

Currently, Russia's fiscal policy is aimed at ensuring the structural transformation of the country's economy. According to the "Main directions of budget, tax, customs and tariff policy for 2023 and for the planning period of 2024 and 2025", such a transformation is carried out, inter alia, through the creation of a fair competitive environment and the reduction of the shadow sector – leveling one of the threats to the economic security of public legal entities.

In a broad sense, the shadow economy is the activity of citizens, bringing them income that is hidden from the state. In a narrow sense, from the standpoint of the theory of tax potential, the shadow economy is a latent tax base, which, with the effective use of tax administration tools, can be transformed into tax revenues of the state. Fiscal security in this study is considered from the perspective of its two components (budgetary and tax security), each of which is associated with the need to ensure a certain amount of state revenue, while they are inextricably linked, since such a volume is necessary to ensure a certain balance of the budgetary system (ensuring budgetary security) through the use of effective tax administration tools (ensuring tax security) for the direct mobilization of such a volume in terms of tax revenues.

From the point of view of ensuring budgetary security, the shadow sector is formed mainly through the use of various public procurement schemes for the purpose of appropriating budget funds. Such schemes may be associated, for example, with a cartel. At the same time, according to Lapina S.B., it can manifest itself both in collusion between officials of the customer, and directly between business entities– competitors ^[28].

From the point of view of ensuring tax security, the shadow sector is always formed when legal entities, individual entrepreneurs, self-employed, unregistered individuals in accordance with the legislation carry out activities and conceal part of the income and property that are subject to taxation. In this regard, the main task of tax administration is a comfortable and transparent "whitewashing" of the economy. Let's highlight the areas in which it is currently being implemented:

– the fight against "gray" wages

     At the parliamentary hearings on the topic "On additional sources of tax revenues of the budgets of the budgetary system of the Russian Federation" on December 9, 2020, D.A. Artamonov announced that "the budget system does not receive about 3 trillion rubles" of personal income tax and insurance premiums. In 2.5 years, the situation has changed (including due to changes in legislation and the introduction of new digital tax administration tools), however, according to a RANEPA study ^[29] in 2023, every fifth resident of the country receives a salary "in an envelope". This fact leads to the search for other effective administrative measures, including analytical control, aimed at further leveling this phenomenon.

–digital transformation of calculation and payment of taxes and fees for small businesses and individuals

Currently, there is a tax on professional income, which is paid by individuals through the My Tax application. For a special tax regime in the form of a simplified taxation system, an experiment is being conducted to automate it (AUSN).

– implementation of innovative product traceability tools

Labeling has already been implemented for 19 product groups (including 4 pilot projects) and has shown its usefulness. The phased implementation of this mechanism for other products will increase the effectiveness of control of sales chains.

– search for industries with uneven tax burden and targeted work with taxpayers

This direction is carried out through the implementation of sectoral projects to "whitewash the economy" in all regions of the country. It seems that due to the different spatial development of the regions, such projects should become "point-based", i.e., a search for problem areas in the region should be carried out and a strategic map for working with this zone should be developed within the framework of the activities of the tax authorities of a particular region.   

– search for new tax evasion schemes and their sanctification in the media.

All of these areas are inextricably linked with the mission of the Federal Tax Service of Russia - effective control and supervisory activities and high quality of services provided for legitimate, transparent and comfortable business, ensuring compliance with taxpayers' rights and forming the financial basis of the state ^[30].

In this regard, the shadow economy represents a deep reserve that should be gradually mobilized into the budget system, while encouraging taxpayers to faithfully fulfill their tax obligations, which will subsequently form a completely different level of tax culture.   

Figure 1 shows the logical model we have developed for leveling the shadow economy of public legal entities in order to ensure their fiscal security based on digital public administration tools. Let's take a closer look at the elements that make up its composition.

We have identified three blocks in each subsystem of fiscal security. The first block consists of digital (information and analytical) tools for ensuring the types of security under consideration (various automated systems and complexes with which the main functions of public administration by authorized bodies are carried out).  The second block is the identification of risks. When using these tools, the administrator (the Federal Tax Service or regulatory authorities in the field of public procurement) may identify the risk associated with the shadow economy. The main task is to eliminate threats to fiscal security (the third block) – the under-receipt by budgets of all levels of tax revenues (for tax security) and the excess of the expenditure part of the budget due to overpricing in public procurement (for budget security). At the same time, reducing the occurrence of this threat is possible by improving the procedure for carrying out control, supervisory and analytical activities using digital tools, as well as improving the efficiency of business processes of tax and other state financial control and their optimization. Let's consider this relationship using the example of the tax security subsystem. Big data generated by taxpayers is subject to analysis and control using digital tools – the VAT ASK. This allows, in particular, to identify industries with a multi-level tax burden and to accurately analyze the activities of specific taxpayers, identifying schemes for hiding income and property from taxation. At the same time, the optimization of tax control by automating part of its processes frees up labor resources that can be effectively used in other areas of activity of authorized state authorities.

The interconnection of the three blocks ensures the achievement of the main goal of fiscal policy - the reduction of the shadow sector.

Figure 1. A logical model for leveling the shadow economy of public legal entities in order to ensure their fiscal security based on digital public administration tools

Source: developed by the author

Analysis of the shadow sector – the activities of intermediary entities in the real estate purchase and sale market (realtors and real estate agencies)

The approbation of the presented model within the framework of ensuring one of its subsystems- tax security was carried out in relation to intermediary entities operating in the real estate purchase and sale market (realtors and real estate agencies) of the Republic of Mari El. The choice of this subject of the Russian Federation is primarily due to the fact that it is one of the regions with the smallest number of specified persons, which allows for their continuous verification. The methods used in testing the model are related only to the analysis of open data available on the Internet. Since the study was conducted without the use of Federal Tax Service data due to their closed nature (the first block of the model), the results may change if you use AIS "Tax-3", in a greater direction in terms of the number of people hiding their income.  

It is assumed that the use of the algorithm developed by the author to analyze the data contained in the databases of the Federal Tax Service and their comparison with open Internet data, in particular the Domclick service, will lead to better results in identifying income intentionally withdrawn by subjects from taxation. This is due to the fact that most of these entities are either individual entrepreneurs or self-employed. In this regard, there is no information about the results of their financial activities in open sources. Therefore, the verification was carried out only on the example of legal entities. In addition, the open source databases proposed in this article, reflecting information about the real activities of intermediaries in the real estate purchase and sale market, are not currently used by tax authorities during control measures. 

At the first stage, the selection of legal entities carrying out their intermediary activities in the Republic of Mari El in the real estate purchase and sale market using the Domclick service was carried out. As indicators characterizing the activity, the following are selected: the number of transactions over the past 12 months and the number of objects on sale as of 09.09.2023. The indicators are open, available to any user.

At the second stage, using the INN of selected organizations in the State Information Resource of accounting (financial) statements service, the results of their financial and economic activities were considered. Revenue for 2022 and 2021 is selected as an indicator.

At the third stage, the analysis of the indicators identified by us was carried out in order to find subjects who can hide their income. The results of the study are presented in Table 2. Of the 18 audited entities, we identified 3 whose activities are associated with a high risk of income concealment, and 5 individuals with an average risk, i.e. the activities of 44% of organizations are associated with a possible risk of income concealment. Let's look at them in more detail.

Table 2. The results of the activities of legal entities providing intermediary services in the real estate purchase and sale market

Source: Compiled by the author based on the analysis of data from the Domclick service https://agencies.domclick.ru /; GIR B(F)Oh https://bo.nalog.ru/organizations-card ; service "Transparent business" https://pb.nalog.ru / .

Organization No. 5 did not submit accounting (financial) statements, therefore it is not in the database of GIR B(F)O. Verification through the Check Your Business service showed that in 2022 the organization paid taxes in the amount of 0 rubles, and in 2021 – 820 rubles. An analysis of the open statistics of the Domclick service on transactions of each realtor of this agency allows us to conclude that at least 4 transactions were conducted from September to December 2022, and 28 transactions from January 2023 to September 2023. At the same time, the Federal Tax Service database contains a message that the Federal Tax Service of Russia for the Republic of Mari El has decided on the upcoming exclusion from the Unified State Register of Legal Entities, which is also contained in the publication of the Bulletin of State Registration. At the time of writing, three months have passed since the publication of this entry. This organization continues to carry out its activities, 10 ads for the sale of real estate objects are publicly available. These facts allow us to conclude that there is a high risk of hiding income.

Organization No. 14 did not submit accounting (financial) statements for 2022. However, an analysis of taxes paid, reflected in the Check Your Business service, and a comparison of data with previous financial results reports allows us to conclude that the amount of revenue from sales over the past three years has practically not changed, however, if we divide the revenue indicator by the number of transactions made through the Domclick service, then we will get the average value of the commission (realtor's fee) charged when buying real estate in Yoshkar-Ola. It should be noted that not all transactions are related to the purchase (the commission for the sale is higher) and many of them are made without the Domclick service. These facts allow us to conclude that there is a high risk of hiding income.

The activities of organization No. 8 are also associated with high risk due to zero sales revenue and zero values for the amount of taxes and fees paid for 2022, whereas an analysis of Domclick service data shows that at least 3 purchase and sale transactions were completed in 2022.

The activities of organizations 4,6,12,16,9 are associated with an average risk of income concealment. We came to this conclusion when analyzing the ratio of revenue from sales and the number of transactions through the Domclick service. The resulting value is several times lower than the average commission charged for the purchase of real estate in Yoshkar-Ola.

The presented algorithm can also be tested on other participants of the market under study. To do this, it is necessary to compare the data of the Domclick service on the number of transactions, objects for sale with the data of the Federal Tax Service on the status and movement of payments on the unified tax account of individual entrepreneurs and the self-employed.

It should be noted that in this study we did not take into account other possible types of income from the activities of intermediaries in the real estate purchase and sale market (for example, commission income received from renting real estate), however, calculations show that even without these data, it is possible to conclude about high or medium risks of hiding income. It seems that further research should be associated with the search for additional risk indicators that will allow scoring the entire market.  

Conclusions

Unlike other similar works (N. L. Kurepina, E. E. Zerkal ^[32]; E. V. Nikulina, I. V. Chistnikova, A.V. Orlova ^[23,33]), this article examines budget and tax security not only from the perspective of its dualism, but also in the context of a certain direction of provision – comfortable and transparent The "whitewashing" of the economy is the reduction of its shadow sector.

The research presented in this article allows us to estimate the number of real estate agencies-legal entities that withdraw income from taxation, based on an analysis of the comparability of accounting (financial) reporting data, information on taxes and fees paid to the budget system, information on the number of transactions made for the purchase and sale of real estate through the Domclick service. The algorithm developed by the author, when used by tax authorities, will reveal the approximate amount of hidden income by individual entrepreneurs and self-employed persons.  

Thus, ensuring fiscal security is associated with the need for state revenues to reach a certain amount and with the control of state expenditures, while both components (budgetary and tax security) are inextricably linked, since their level affects the balance of the budget system through the use of effective tax administration tools and other tools of state financial control. At the same time, in the context of the shadow sector, fiscal security should be considered taking into account the risks of cartel collusion and concealment of part of income and property from taxation.