Tax risk: types, factors, consequences, analysis and optimization

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

In the process of doing business, entrepreneurs often face all sorts of risks, on which success in business often depends. Such a strategy may well be justified, since the conditions of fierce competition require the timely introduction of new ideas and technologies. Deciding to take such a step, an entrepreneur must adequately assess the degree of risk and be able to manage it.

The nature of risk occurrence

Such a concept as tax risk can be viewed from two positions: an entrepreneur and a tax inspectorate. On the one hand, merchants may find themselves in a difficult situation caused by an increase in the tax rate or a reduction in certain benefits, and on the other hand, regulatory authorities risk not receiving the necessary amount to the budget due to a tightening of the regime and a change in tax policy.

Many tax risk factors businessmen have learned to determine in advance. Concerningunforeseen situations arise in most cases due to uncertainty or insufficient knowledge of the law. The ability to correctly calculate the situation many steps ahead significantly mitigates the consequences and allows you to protect yourself from troubles in advance.

First step towards risk management

Quite often, Russian merchants do not pay due attention to the tax system, as a result, the planned business tactics turn out to be unprofitable due to excessive tax deductions. It is especially disappointing to find such a nuisance after the transaction, and the tax authorities themselves can report negative consequences.

Naturally, in such a situation, they begin to look for who is to blame for the current situation, and think about how to correct the consequences of tax risks now. The answer in this situation is obvious. Instead of blaming an accountant, financial director or tax consultant for miscalculations or hoping that the consequences will not be so significant, the best thing to do would be to learn how to manage risk. But for this you need to correctly understand the nature of the emergence of a critical situation, as well as its scale.

How not to miss the moment of tax risk occurrence

Oddly enough, it is necessary to look for the cause of the problem not at the moment when the tax risk led to the emergence of payment arrears, but much earlier, when the deal was under development. When using the righttax planning in 90% of cases can avoid negative consequences. An aggressive business policy based on the elimination of competition by any means is incompatible with the rational reduction of the tax burden.

Modern business structure is designed in such a way that in the process of financial activity, some create risks, while others anticipate them. Companies that are just starting to develop their business should most actively contact tax liability controllers. In practice, however, such parties prefer to remain at different poles. For example, situations are not uncommon when an accountant learns about a completed transaction quite late, and it is not possible to change anything. In connection with this situation, many reputable companies create special structural divisions that are required to calculate all the possibilities of tax risk.

Types of tax risks and their causes

If we consider the negative consequences in terms of their occurrence, then the risks can be divided into separate groups.

Russian legislation quite often has an ambiguous interpretation, which is used by some businessmen. In pursuit of profit, business leaders are trying to tilt the essence of the controversial regulatory document in their favor, and therefore they automatically fall into the risk zone, as they try to reduce the tax burden. In such a situation, extreme caution and good knowledge of the regulatory framework is required.

It's pretty embarrassing when the tax risk comes fromdue to inconsistency in management. The accounting structure and managers do not have the opportunity to discuss the planned transaction in advance, as a result of which the entire business suffers.

Ambiguous interpretation of the law and documentary violations

The risk of negative tax consequences is most likely when entering into unusual contractual relationships, the financial mechanism of which is not fully thought out.

Financial tax risks often appear due to poor-quality documentation or its absence. According to statistics, the bulk of additional tax payments appeared due to the lack of paper confirmation of the transaction. This is due to the fact that the leaders, having received money, do not attach due importance to the design of their appearance.

Portfolio and external risks

The so-called portfolio risks carry a hidden danger, especially if the company has a large network of branches or subsidiaries. The situation can become threatening when individual risks combine into one. At first glance, the negative situation that has developed in a single branch may seem trifling, but when such problems begin to become widespread, it becomes quite difficult for the company to neutralize the consequences.

Changes in tax laws, litigation, change of leadership - all these facts are related to external risks. Regional features of taxation can exacerbate the situation, since in our countrysome tax rates are set locally. And if the company conducts foreign trade, then in this case, accounting for taxes is even more complicated.

Who should manage risk

There is no doubt that risks can and should be managed. To find the right solutions and ways out of the crisis in modern business, professional consulting firms are being created. To manage tax risk, there are a number of techniques and methods that allow you to predict the likelihood of an undesirable event.

Economic activity in the field of risk management is quite specific and requires deep knowledge of tax, civil and criminal law from professionals. The main goal in solving taxation problems is to find the optimal combination of revenue and possible risk. This formula is especially important when implementing highly profitable projects, as it is known that the higher the income, the greater the risk.

Golden rules of risk

As in any other area, risk management is subject to certain rules, the observance of which leads to a positive result:

• You can't risk much for a relatively small gain.
• Always be clear about the consequences of your actions.
• In business, you should never bet more than you have.

These economic constants are enough to keep the business within acceptable risk limits. Compliance with such principles gives rise to the main methods of preventing risky situations. In other words, risk can be avoided, accepted or reduced.

Risk avoidance is the preferred technique. It is based on a complete refusal to complete a transaction in the event of negative consequences. But abandoning the planned business model also means losing profits. So, excluding the tax risk, you need to commensurate it with other losses. In addition, the refusal of one risky business can lead to a chain of other negative consequences.

The acceptance of tax consequences can be full or partial. In this case, the businessman is obliged to answer with his own assets for all the consequences that arise as a result of the implementation of a particular operation.

Reducing tax risks is the most time-consuming and at the same time effective way to solve difficult economic situations.

Tax evasion

In our country, tax evasion is an illegal act, for which various pen alties are provided. The consequences of deliberate tax evasion can be divided into criminal and non-criminal.

Violation of tax and legal laws, incorrect accounting, underestimation of the real value of goods, arithmetic errors made when calculating taxes, are non-criminal actions depending on the amount of the crime.

Tax avoidance methods,leading to disastrous results

Leader among all schemes of illegal tax evasion is hidden implementation.

This is the simplest, and at the same time criminal method, based on the non-posting of part of the proceeds to accounting and tax accounts. Concealment of income can be carried out by violating the mode of use of cash registers, unreliable reflection of contractual payments and exceeding the limit of cash mutual settlements between legal entities. When using these methods, tax accounting is carried out using double-entry bookkeeping, in which deliberately false data is entered.

In accordance with criminal law, such "optimization" of taxes, depending on the amount of damage caused, is punishable by deprivation of the opportunity to conduct a particular commercial activity. Also, perpetrators can be arrested for up to six months and imprisoned for up to three years.

Legal tax optimization

Legal optimization of taxation is based on certain principles that are observed in the relationship between merchants and regulatory authorities:

• Taxes must be paid in accordance with established laws.
• Accruals must be paid no later than the last day of the due date.
• The organization has the right to charge minimum taxes without violating the law.

Legal optimization of tax payments must be separated from deliberate evasion. In order not to cross this line, the company must haveorganized professional planning and control. The tax risks of an agreement concluded with a partner must be assessed and optimized in a timely manner. Every leader should be well aware of the degree of responsibility that will be assigned to him in case of violation of the law.