Hidden Unemployment as an Object of Budget Losses Formation through Tax Risks

Abstract

The subject of the study is informal employment of the population, taking into account the established positive judicial practice, entailing the occurrence of tax risks and, as a result, loss of budget revenues, loss of the possibility of using guaranteed state social protection by employees engaged in labor relations without contractual relations. The purpose of the work is to identify ways to legalize income earned by citizens of working age without registration of employment contracts. The relevance of the article is due to the fact that in modern economic conditions, the practice of relations between employers and employees who carry out employment activities without formalizing contractual relations and receive remuneration for work «in envelopes» and, accordingly, deprived of the rights to state guarantees of health protection at the expense of the relevant budget, insurance premiums and pension provision has not yet been eliminated. The study analyzes the consequences of using informal wage payment schemes through the use of analytical and logical approaches, comparison, generalization, etc. It is concluded that constant monitoring of the relationship between employers and employees is necessary, aimed at identifying the emergence of prerequisites for the manifestation of risks of paying income to employees «in envelopes» for the performance of work duties, and minimizing the consequences of them for citizens, the state and employers. It is proposed to give the commission on the legalization of income and the tax base on personal income tax and insurance premiums the right to hold employers accountable for using «envelope» schemes for paying employees for their work.