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DOI: https://doi.org/10.34069/AI/2022.53.05.21
How to Cite:
Tatarova, T., Chubenko, A., Sabluk, S., Nironka, I., & Kovalenko, A. (2022). Possibilities of implementation of foreign experience
of administrative and legal support of fiscal control in domestic realities (Canadian example). Amazonia Investiga, 11(53), 214-219.
https://doi.org/10.34069/AI/2022.53.05.21
Possibilities of implementation of foreign experience of administrative
and legal support of fiscal control in domestic realities
(Canadian example)
Можливості імплементації зарубіжного досвіду адміністративно-правового
забезпечення організації фіскального контролю у вітчизняні реалії
(на прикладі Канади)
Received: May 3, 2022 Accepted: June 7, 2022
Written by:
Tatarova Tetiana89
https://orcid.org/0000-0002-9575-7940
Chubenko Anton90
https://orcid.org/0000-0002-0887-5667
Sabluk Serhii91
https://orcid.org/0000-0001-5055-9169
Nironka Iurii92
https://orcid.org/0000-0001-5772-7540
Kovalenko Andrii93
https://orcid.org/0000-0001-9739-8219
Abstract
The purpose of the article is to summarize
Canada’s experience in providing administrative
and legal support for fiscal control. The subject
matter of the study is fiscal control in Canada.
The methodological basis for the article is a
number of modern methods of scientific
knowledge, such as: dialectical, logical,
monographic, system and structural, methods of
modeling and forecasting, documentary analysis,
etc. The results of the study can be used to
conduct further research on improving fiscal
control in Ukraine on the example of leading
countries. The scientific novelty of the article is
that a comprehensive analysis of Canada’s
experience in the field of administrative and legal
support for fiscal control is carried out for the
first time, as well as the possibility of its
implementation in domestic realities is
considered. Value / originality. The proposals to
improve the system of fiscal control of Ukraine
by borrowing certain provisions of the Canadian
experience on this issue are formulated.
89
PhD in Law, Doctoral Student of the National Academy of Internal Affairs, Ukraine.
90
Doctor of Law, Professor, Leading Researcher of the Scientific Institute of Public Law, Ukraine.
91
Doctor of Law, Senior Researcher, Chief Scientific Officer of the Scientific Institute of Public Law, Ukraine.
92
PhD in Law, Senior Research Fellow of the Scientific Institute of Public Law, Ukraine.
93
Doctor of Legal Sciences, Associate Professor, Professor of the Department of Criminal and Legal Disciplines of Dnipropetrovsk
State University of Internal Affairs, Ukraine.
Tatarova, T., Chubenko, A., Sabluk, S., Nironka, I., Kovalenko, A. / Volume 11 - Issue 53: 214-219 / May, 2022
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Keywords: administrative and legal support,
Canada, fiscal control, foreign experience,
implementation.
Introduction
The stability of the State and sustainable
development of all its institutions in general and
financial sphere in particular, largely depend on
the timeliness of the collection and payment of
mandatory taxes and charges. However, speaking
about the State in general, we should not forget
that taxes are an integral part of the financial and
economic activities of enterprises, institutions
and organizations, regardless of their form of
ownership, for which they spend a significant
part of their income. That is why quite often the
heads of the relevant business entities wish to
show the wrong results of financial and economic
activities in order to reduce taxes or even evade
any payment of taxes and fees and to increase the
profitability and viability of their organization.
And there is an interconnected trend where,
because of these schemes, the State budget does
not receive significant sums of money (i.e. there
is a budget deficit), and the result is an increase
in the shadow economy, which in general has a
devastating effect on economic security and
vulnerability to external financial and political
influence. The solution for the State is to
introduce additional tax burden, which, again,
will be borne by law-abiding taxpayers. This
order reduces competitiveness and provokes
social tensions, which in turn leads to increased
tax evasion, and the State is losing even more of
its financial resources. This problem can be
solved only through high-quality, effective and
transparent fiscal control, which should be based
on deep theoretical and practical knowledge. In
particular, it is important to conduct
comprehensive research on the study of foreign
experience in administrative and legal support
for the organization of fiscal control.
In view of the above, the purpose of the presented
research is to study the possibilities of
implementing foreign experience of
administrative and legal support for the
organization of fiscal control in the Ukrainian
realities, in particular on the example of Canada.
Given this goal, the objectives of the article are:
− to analyze the scientific views of those
scientists, who have studied the Canadian
tax system;
− to consider and characterize the tax
legislation of the specified country.
Methodology
The methodological basis for this article are both
general and special methods of scientific
knowledge. Thus, monography method is used to
consider the researches by foreign and Ukrainian
scholars, who have examined Canadian
experience in budget process and fiscal control.
The method of documentary analysis is applied
to characterize Canadian tax law.
Dialectical method along with logical method
make it possible to analyze the features of legal
status of the Canadian Revenue Agency, to study
its system and authority.
System and structural method is useful for
outlining the structure elements of the Office of
the Tax Ombudsman, as well as their functions
and powers.
Modeling and forecasting methods help to
develop the possibilities and directions for
implementing Canada’s experience in
administrative and legal support for the
organization of fiscal control in the domestic
realities.
Literature Review
Problematic issues related to the analysis of
foreign experience in fiscal control have been
considered by a number of scholars. Thus, for
example, Melnyk and Leshchuk (2015) paid
attention to the problem of institutional
distortions of the tax control system in Ukraine,
among which they highlighted regulatory and
legal issues, as well as corruption problems of tax
control. As a result of establishing a range of
problematic issues and based on the analysis of
tax systems of foreign countries, the authors
formulated proposals to use the experience of
leading countries to improve the control and
verification work of domestic tax authorities.
The work by Galai and Yavorska (2014) also
deserves attention. The Authors note that public
administration and local government were
considered as two completely unrelated
phenomena in legal science and management
science, as well as in domestic law. They
analyzed the theory and practice of fiscal control
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in a number of developed countries, based on
which a number of significant proposals and
recommendations were made.
Stepanenko and Rudenko (2020), having
analyzed the relevant foreign experience, found
that the main problems of tax control in Ukraine
are: corruption in solving “problematic” issues
based on the control results by tax authorities;
often unjustified objectives and methods of tax
control; lack of tax awareness of taxpayers,
aimed at self-proper calculation of tax liabilities,
their voluntary payment; low level of tax culture
of taxpayers, mainly due to constant and
numerous innovations in the domestic
legislation, lack of prior awareness of taxpayers
about the expected changes in it.
Some issues of public finances control in Canada
were considered by Domingue and Salvail
(1992). In particular, the authors studied the
features of budget process and the authority of
the bodies managing and controlling the public
finances.
Blöndal (2001) examined the peculiarities of
budgeting in Canada.
Ruggeri and McMullin (2004) compared the
current situation and future prospects of fiscal
systems of the USA and Canada and came to the
conclusion that the Canadian one has a fiscal
advantage because it has a sustainable fiscal
structure.
There are also some researches of
multidimensional nature. For example, Alonso et
al. (2010) presented a comprehensive study on
strengthening the fiscal capacity of developing
countries. This includes, first of all, promoting
fiscal systems and administrations of these
States; and secondly, improving international
cooperation on tax matter, which helps to combat
fraud, unlawful money transactions and
withdrawal of capital.
Gallegos Zúñiga (2018), in his turn, examined
the fiscal rules in the countries of the Pacific
Alliance (Mexico, Colombia, Peru and Chile).
The Author investigated the tax regulations of
these States, the agencies authorized to perform
tax control and allocated some problems and
gasps that need to be eliminated.
However, these works do not fully reveal the
possibilities of implementation of positive
foreign experience in the realities of Ukrainian
legal system, what has led to the need and
relevance of our research.
Results and Discussion
Fiscal control in Canada is handled by the
Canadian Revenue Agency (CRA). The agency
manages taxes, benefits, and related programs
and enforces fiscal requirements on behalf of the
government throughout Canada, thereby
contributing to the sustainable economic and
social well-being of Canadians. (Justice Laws
Website, 1999).
According to the Canada’s tax system the
taxpayers, which include both legal and natural
persons-entrepreneurs, should submit an annual
income tax form to identify whether they are
liable to pay taxes or are reimbursed part of the
taxes paid. Such a tax system is considered the
most economical and effective way of collecting
income tax (Government of Canada, 2020).
For natural persons usually tax returns for the
previous tax year must be filed by April 30. For
various types of legal persons, the deadline for
paying taxes can vary greatly. Due to failures
caused by COVID-19 (as Kharytonov et al.,
2021, p. 158)) correctly point out, the COVID-19
pandemic has been going on for two years now,
threatening the lives and health of people, the
stable functioning of economic mechanisms, and
the social existence of society), in 2019 the CRA
extended the deadline for filing an individual tax
return for 2 months (Government of Canada,
2020).
The Canadian Tax Agency regulates tax law for
the Government of Canada and most provinces
and territories. It is responsible for collecting
taxes and fees, such as: federal, provincial and
territorial income taxes; tax on goods and
services / harmonized sales tax; contributions to
Canada’s pension scheme; insurance
contributions for working citizens. The agency
also provides Canadians with various
concessional and credit programs through the tax
system (Government of Canada, 2020).
Operational management of the CRA is entrusted
to the head of the agency, who is responsible for
organizing the tax process, the results of tax
administration, the effectiveness of the agency as
a whole. The head is accountable to the board of
directors. In addition, the duties of the head of the
agency include informing and advising the
Minister of Finance on tax administration. When
allocating a single tax unit within the national
Ministry of Finance, the functions of tax
administration are performed by this unit, and all
administrative and managerial functions
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(personnel policy, logistics, finance, etc.) are
concentrated at the level of the Ministry of
Finance. The work of tax authorities in Austria,
France, Switzerland (at the level of the federal
government) is similarly organized.
The management of the tax process in the CRA
is carried out within the functional units, which
include the following divisions: appeals;
evaluations and benefits services; reconciliation
and dispute resolution programs; inspections of
legal entities; risk management; work with
taxpayers and debt management; analysis of
legislation. Besides, the structure of the CRA
includes the units that serve its operations:
finance, human resources, information
technology, etc.
Outside of its headquarters in Canada, CRA
operates in 4 regions, helping to perform the
tasks of the Agency in each part of the State. The
assistant commissioner leads each region and
monitors tax centers and services in their area of
responsibility (Government of Canada, 2020).
Tax centers receive and consider income tax
forms of individuals and enterprisers. There are
4 tax centers throughout Canada, each with its
own area of concern, which varies on the form of
declaration. Tax offices are sometimes divided
into branches for organizational purposes
(Government of Canada, 2020). Disputes and
procedural activities are carried out by
commissions of inquiry set up by the governor
for a comprehensive and impartial investigation
of matters of national importance. Commissions
are chaired by prominent people, experts or
judges and have the right to call witnesses, take
evidence under oath and request documents.
Conclusions and recommendations of
commissions of inquiry are not binding.
However, most of them have a significant impact
on public opinion and public policy.
The Office of the Tax Ombudsman
(Commissioner for Taxpayers’ Rights) is an
interesting institution in the area of fiscal control
in Canada. It is established to strengthen Canada
Revenue Authority service accountability and
treatment of taxpayers through independent and
objective review of complaints related to services
and system problems.
The Office of the Commissioner consists of 3
joint working groups: Reception Group,
Individual Analysis Group, and System
Expertise Group.
Reception Group members are the first contact
persons when contacting citizens. They help
taxpayers and recipients of benefits in the areas
of:
− providing information on the Taxpayer’s
Bill of Rights;
− assisting them in accessing compensation
mechanisms at the Canadian Tax Agency or
other government agencies;
− processing of complaints and appeals
received by the Office of the Ombudsman.
The Individual Analysis Group handles the
taxpayer complaints about the service or fairness
of decision. Its main powers are as follows:
− conducting an objective examination of the
received complaints;
− assessing the level of service and treatment
of the Canadian Tax Agency with individual
taxpayers;
− drawing sound conclusions based on
evidence.
The System Expertise Group is studying issues
that could negatively affect a large number of
taxpayers or part of the population. The main
powers of this group are the following:
− identification of systemic problems in the
area of service or fairness of decisions;
− gathering information from applicants,
CRAs and other stakeholders;
− generalization of analysis results and
preparation of recommendations.
Thus, it can be concluded that each of the groups
responsible performs its powers in a clearly
defined area using a specific arsenal of
administrative and legal forms and methods
(legal tools).
It should be noted that each taxpayer has eight
rights in the provision of services set forth in the
Taxpayer’s Bill of Rights, which governs
relations with the CRA. The Ombudsman is
responsible for the Agency’s compliance with
these rights in its relations with taxpayers.
It should be noted that the mission of the Tax
Ombudsman is to raise public awareness of
taxpayers’ rights, influence positive changes in
the CRA, strengthen or improve the
accountability of the CRA and ensure that
complaints about CRA services are fair. The
activities of the Taxpayer’s Commissioner are
based on the following principles: independence
(the Ombudsman works separately from the
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CRA); objectivity (the Ombudsman does not
represent or take the side of either the
complainant or the Canadian Tax Agency. In
considering a complaint or question, the
Ombudsman takes into account the position and
point of view of both the taxpayer and the CRA);
honesty (Ombudsman acts impartially and
fairly); Confidentiality (Ombudsman keeps all
data of persons requesting assistance in strict
secrecy and does not disclose the content of
confidential communications unless authorized
to do so) (Government of Canada, 2016).
Another fact that proves the focus of the Tax
Ombudsman on people’s interests are the ways
of submitting citizens’ appeals, including: in
person, when visiting the office; by telephone /
fax; by postal service; by e-mail; by filling out
the application form on the website. Besides, the
access to the Ombudsman is facilitated by the
location of his / her office – it is right next to the
Canadian Tax Agency building to ensure
maximum convenience and accessibility for
citizens.
In our opinion, the activity of such an institute is
extremely useful and effective. We believe that,
on the one hand, the very fact of its existence
contributes to the maximum realization of human
rights in the areas of filing appeals of citizens, the
realization of rights in the tax sphere, the right to
protection, etc. On the other hand, the existence
of such a structure reduces the burden on the
fiscal control authorities in the consideration of
citizens’ appeals related to taxes, as it acts as a
kind of “filter”, which allows only appeals that
are reasonable and lawful. That is why, in our
opinion, it is appropriate to establish the
institution of the Commissioner for the Rights of
Taxpayers in Ukraine.
Conclusion
Thus, as a result of the analysis of certain
organizational aspects of the functioning of fiscal
control bodies in foreign countries, namely in
Canada, we consider it appropriate to formulate
proposals for improving the fiscal control system
by borrowing from individual provisions,
namely:
− improving the system of monitoring tax risks
by updating the Register of dishonest
taxpayers;
− introduction of the system of random
selection of controlling persons authorized
to conduct tax audits;
− implementation in national legislation of the
world principles of fiscal control
transparency.
As for the expediency of implementing global
principles of fiscal control transparency into
national legislation, thus, as a result of the
analysis of foreign experience of administrative
and legal support for fiscal control, we consider
it appropriate to include the following:
− key compliance of fiscal data with data
quality standards;
− internal oversight and safeguarding of fiscal
activities;
− the need for careful verification of the
provided fiscal information.
Therefore, summarizing the above, we consider
it necessary to emphasize the expediency of
taking into account international standards,
recommendations of international organizations
to improve national legislation and use the
experience of foreign countries, in particular in:
1) elimination of certain contradictions and
gaps in the legislation (legislative support of
certain forms of fiscal services; upgrading
the capacity of the fiscal service; review of
potential capabilities of controlling entities;
avoiding the abuse of fiscal discretion);
2) development of mechanisms for adequate
response of fiscal control actors to the
threats arising in the area of their
competence;
3) review of the format of monitoring and
oversight activities.
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