Tax Risk Analysis and Management Methods

Abstract

Considering the growing budget deficit in Russia, low consumer demand, tightening sanctions for default in taxpayers’ duties and increasing periods of limitation for criminal tax offences, expanding parameters of the collection and exchange of tax data, rapid growth of the technological level and expertise of tax authorities, slump in business activity and increased exchange risks, the matters that predetermine the formation of a particular type of risk become especially crucial, and the need for an efficient management system grows. Aim. This study aims to identify methods for the analysis and management of tax risks with the purpose of creating a monitoring system adapted to the specifics of business and the external environment. Tasks. This study assesses the consequences of tax risks for taxpayers, identifies the reasons for the formation of tax risks instigated by the actions of taxpayers and tax authorities, and recommends qualitative methods for the analysis of tax risk level as well as a system of methods for tax risk management. Results. The concept of “tax risk” is explained, and potential tax risk threats for taxpayers are identified. The level of tax burden is evaluated by type of economic activity and consequences for the deviation from its average value. The importance of tax risk analysis methods as a toll for minimizing risks is emphasized. Methods for reducing tax risk level are proposed (diversification, accumulation of reserve, risk localization, rationing, insurance, risk transfer).