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1993 SNA Update Information - Country comments for issue:
Originals and copies

Issue description
Issue description in [English] | [French] | [Russian] | [Spanish]
Following the 1993 SNA’s introduction of computer software as capital formation, it became more evident that the SNA does not provide guidance on the treatment of originals and copies as distinct products. Should expenditures on originals and copies both be recorded as expenditure (on new goods) on the basis that originals are distinct from copies, or should originals be considered as being analogous to a ‘stock’ of copies, and so expenditure on a copy partly (or mostly) reflects a sale of an existing good? How should the transactions in copies be recorded?
Country comments
Number of country comments for selected issue:78
  Date postedSourceComment
 10/10/2006SwedenReservation/difficulty in implementation
 15/09/2006United KingdomWe believe that recognising copies of an original as capital assets in their own right is a mistake. However, in as far as access to originals is increasingly through relatively short-term licence arrangements, double-counting will be avoided. The issue of double-counting of assets, and so raising the level of GDP, has not been resolved.
 15/09/2006LatviaAfter deep discussions and expert consultations we basically support the 1993 SNA Update Issues.
 18/08/2006ItalyWe are in favour of recommendation 1 to record expenditures on copies as GFCF when general conditions for an asset are met. We are not in favour of recommendation 2 relating to licenses-to-reproduce.
 31/07/2006MongoliaWe agree with the AEG that annual license fees for software with a long-term contract should be treated as fixed capital, while those without a long-term contract should be treated as rentals. A long-term lease of software should be treated as a financial lease where identifiable. Also we agree that copies issued under license to use should be recorded as gross fixed capital formation.
 27/07/2006EgyptWe agree that annual license fees for software should be treated as fixed capital.
 24/07/2006NepalWe agree with the recommendations of AEG that annual license fees for software with a long-term contract should be treated as capital formation, while those with short term contract should be treated as only rentals. However, identification of the nature of agreement between two parties becomes difficult in practice. Further clarification/elaboration in this regard may be needed to incorporate such transactions in national accounts.
 23/02/2006South African Reserve Bank We agree with all the recommendations made by the AEG.
 27/01/2006Central Bank of El SalvadorEstamos de acuerdo con las recomendaciones de AEG. La producción de copias se debe registrar como FBKF cuando se identifiquen como activos fijos, los softwares deben ser tratados como cualquier otro activo.
 17/01/2006Kuwait1. Kuwait agrees that if a copy (licence-to-use) is acquired via regular annual payments the payments should be recorded as financial lease transactions if it can be established that the purchaser intends to use the copy repeatedly in production until the end of its economic life. Intent to renew the licence to use repeatedly can be determined by asking if significant associated costs are incurred on acquisition.
2. Kuwait agrees that when the acquisition of a licence to use a copy is judged to be capital formation then the full value of the software reproduction should be recorded as fixed capital formation at the time of acquisition, with annual licence payments corresponding to interest payments thereafter, following the usual national accounts rules for financial leases. When this is not practical, it is acceptable to capitalise the annual licence payments as and when they occur and record as CFC in the same year.
 03/01/2006CubaConsideramos que los originales deben registrarse como stocks y las copias como bienes
 03/01/2006SingaporeWe agree with the AEG that annual license fees for software with a long-term contract should be treated as fixed capital, while those without a long-term contract should be treated as rentals. A long-term lease of software should be treated as a financial lease where identifiable.
 22/12/2005Serbia and MontenegroWe agree with the suggested changes.
 19/12/2005KenyaAgreed in principle but not yet able to measure
 14/12/2005FranceL'INSEE soutient les recommandations faites par I'AEG lors des réunions de décembre 2004 et de juillet 2005 visant à préciser certains détails relatifs à la mesure, principalement, des software. Les fournitures de logiciels comportant des versements réguliers sans s'inscrire dans un contrat de long terme, ainsi que sur les dépenses annexes aux locations de logiciels ne doivent pas être capitalisées.
 13/12/2005CanadaCanada agrees in principal that the treatment of software license fees requires some notion of commitment to the product for the annual fees to be treated as capital formation. In practice, I will be difficult to distinguish between these cases and companies will only report total software purchases and it will be subject to interpretation by the reporter as to whether the payment was a purchase or a rental.
 12/12/2005Bank of KoreaSince the "intention to renew" might not be identified adequately we oppose the proposal (a). But we agree to all the recommendations of the proposal (b).
 12/12/2005MexicoEstamos de acuerdo en el tratamiento de los originales como formación bruta de capital, pues el es similar a la venta de un activo fijo existente, donde la formación Bruta de Capital Fijo del dueño del original disminuye y la del nuevo dueño aumenta.
Respecto a las copias estamos de acuerdo si una copia ( licencia para usar) es adquirida de manera regular vía pagos anuales los pagos deberían de registrarse como transacciones de contratos financieros, si se puede establecer que el comprador tiene la instrucción de usar la copia repetidamente en la producción hasta el final de su vida útil, sin embargo para otras copias la intención de renovar la licencia para utilizarla repetidamente puede ser poco común, cuando las condiciones para un activo no son satisfechas o el pago esta por debajo de su punto de partida (herramientas menores) o el uso es menor a un año el pago por la licencia, debe ser tratado como una compra de servicios y por lo tanto como consumo intermedio.
En el caso que cumpla las condiciones de un activo de capital el pago por la copia es tratado como formación bruta de capital.
La implementación de estas recomendaciones, esta en función de la disponibilidad de estadística básica sobre el tema
 09/12/2005RussiaRosstat largely supports the recommendations on the updating 1993 SNA, made at the July 2005 meeting of the Advisory Expert Group on National Accounts.
 05/12/2005DenmarkAgreement
 02/12/2005NetherlandsWe generally support the recommendations of the AEG.
 02/12/2005AustraliaAustralia agrees with the AEG recommendations.
 02/12/2005TurkeyWe agree with the recommendations made at the July 2005 meeting of the Advisory Expert Group on National Accounts.
 01/12/2005Germanya) The AEG implicitly accepted the previous recommendations (even if the above details have been rejected), which lead to a basic change of the treatment in SNA of originals, copies (including software) and even of the tangible goods incorporating them.
b) In our view the whole body of recommendations on originals and copies is rather confusing and therefore we cannot agree with them as an international guideline. Especially they aren’t coping with controversial points coming along with the inclusion in the SNA 1993 of original as GFCF and of their copies as services.
c) For instance in the case of a book or CD production we need to distinguish three steps:
- drafting of the original (text or song) by the author, which in SNA-93 is treated as pro-duction of an intangible asset (GFCF);
- permission (copy) given to a publisher to use the original (against a copyright fee), which in SNA-93 is always considered as a service rendered by the author ;
- production (and sale) of the physical book or CD by the publisher (as one cost element the copyright fee enters), this in SNA-93 as well as in SNA-68 is treated as output of goods on one hand and as intermediate consumption or private consumption or GFCF of the buyer on the other hand (depending on the circumstances).
Only the two first indents were introduced by the SNA-93 to extend the production boundary and to be able to book such license fees as intermediate consumption (and hence to exclude them from operating surplus). This rationale has to be kept in mind and also kept alive in the updated SNA.
d) A possible open question may be the treatment of downloads from the internet. But also in this case a physical carrier (eg. electronic impulses) is needed to be able to use the download. So in fact there is no need to change anything in the treatment of originals and copies, but only to make clear, that the production of data on any kind of carrier has to be treated similar to the production of any other tangible goods.
e) New computer programmes and new data bases shall be included - as in the SNA 1993 - under "computer software” (AN.1122) and not under "originals" (AN.1123), although there are originals in this area too.
 01/12/2005NorwayWe agree with the AEG's recommendations.
 01/12/2005BrazilWe endorse the AEG decisions in the Bangkok meeting.
 01/12/2005IsraelWe agree that treatment of software should be similar to the treatment of other assets. However, since the service life of software in many cases is quite short, and with longer contracts the customer does not just rent one copy of software, but mostly gets new versions of a software over the years without additional payment, the distinction between long-term contracts and other contracts could seem unnecessary, and for practical reasons a better solution would be to classify all as assets.
 01/12/2005United KingdomWe agree with the AEG decision that, in general, software should be treated in a similar way to any other asset. However, we are concerned at the practical complications implied by the current recommendations. We think it is wrong for payment terms to determine the classification but this seems to be implied by the current material. This gives three cases:
annual licence fees are rentals
• a large up-front payment should be treated as fixed capital formation
• smaller follow up fees to a large up-front payment should be service payments
Are all three different cases justified? And, even if this recording was right, it should be based on principles and not written as if the recording itself was equivalent to the principles.
 30/11/2005Slovak RepublicSO SR agree with AEG recommendations.
 30/11/2005Palestinian Central Bureau of StatisticsPCBS support the decision to consider the copies issued under licenses for use should be reported as gross fixed capital formation.
1. They must be specified in details about the period of payments, as it is for long run we support the treatment as financial lease.
2. The payment in short run must be recorded as fixed capital formation when it occured and also in large initial first payment we agree the treatment as fixed capital formation which is more appropriate and the license fees may also be treated as charges.
 30/11/2005ItalyIstat fully agrees with the recommendations made at the July 2005 meeting of the Advisory Expert Group on National Accounts.
 30/11/2005State Bank of PakistanWe have gone through recommendations made by Advisory Expert Group (AEG) and fully agree with them.
 30/11/2005State Bank of VietnamWe agree with the recommendation of the AEG. However we need more guidelines and c1assifications on issued licenses to reproduce.
 29/11/2005TadjikistanМы согласны с предлагаемой трактовкой затрат на оригиналы и копии, а также с предложениями по учету операций с копиями.
 29/11/2005LithuaniaWe support the AEG recommendations. The copies could be capitalised as well when they are produced under the license.
 29/11/2005CambodiaWe agree that originals and copies in term of “License-to-reproduce” should be treated as fixed capital formation and be classified as intangible asses. However, there should be clarified about its classification in real term of practice by the national level. For Cambodia, it is difficult in practice for gathering data sources.
 29/11/2005People's Bank of ChinaI agree with your improvements and have no other suggestions.
 25/11/2005VietnamWe agree with the recommendation of the AEG. However we need more guidelines and classifications on issued licenses to reproduce.
 21/11/2005USAWe agree with the recommendations of the AEG to treat software the same as other fixed assets with respect to the boundary between rental and fixed capital formation.
 30/06/2005Slovak RepublicWe agree with AEG recommendations. In our opinion, if copies produced under the licence meet capitalisation criteria, their acquisition should be recorded as a gross fixed capital formation.
 30/06/2005Serbia and MontenegroWe agree with the recommendations made at the December 2004 meeting of the AEG.
 22/06/2005Bank of GhanaAccording to the 1993 SNA, the production of originals and copies is a two-stage process. The first results in the production of the original, and the second stage results in the production of copies. The original is an intangible fixed asset. The owner may use it directly in production or to produce copies, with both uses resulting in consumption of fixed capital of the original by the owner. The owner may also licence other producers to make use of the original in production. In these cases, the owner is treated as providing services to the licensees. These services are recorded as part of the intermediate consumption of the licensees, and as consumption of fixed capital of the original in the accounts of the originator. The Canberra II Group has indeed addressed these issues relating to licences-to-use and licences-to-reproduce satisfactorily so far. However, there needs to be further work to ensure convergence in the relative positions of the Canberra Group on one hand, and the OECD/EUROSTAT Task Force on the other.
 03/06/2005Central Bank of VenezuelaWe agree with the proposal to treat the payment for use licenses in productive processes as gross fixed capital formation, provided they are used for more than one year. However, the definition of minor tools is ambiguous, since in the end it is the informant who defines the disbursements treated as capital or posted to assets and those deemed a current expenditure.
We believe that the recommendation that the license be granted to reproduce under an operating lease is appropriate. The transaction represents the rendering of service by the owners of the license. Therefore, the users should book it as intermediate consumption. Consumption of fixed capital for the original should be estimated for the use of the asset (license). In the event of the sale of a license, it should be considered a sale of all or part of the original and booked as a decrease in the value of gross fixed capital formation (GFCF) of the owner and an increase in the GFCF of the licensee.
It should be noted that patents and scientific originals are not addressed to the extent the criteria for booking diverge.
 19/05/2005Bank of IndonesiaBI agrees with the principal concept in recording copies acquired by producing units with licenses to use as fixed capital formation but it creates problems in implementation.
 18/05/2005Central Bank of ChileWe agree that the production of copies are the outcome of new production and that the copies should be recorded as gross fixed capital formation (GFCF) when they display the characteristics of fixed assets.
We also agree that the licenses to reproduce constitute a decrease in the net worth of the agent selling its rights to the original. In such case, the GFCF of the owner of the original should be decreased and there should be an offsetting entry posted to the GFCF of the buyer.
Implementation of this recommendation would be problematic in Chile due to the lack of appropriate data.
 16/05/2005JordanDOS support the idea of not introducing any changes to current SNA except to make it clear for NA compilers as recommended by Canberra Group in case of Licenses-to-use the copies but in case of Licenses-to- produce the department agree with the AEG recommendation to treat the payments made as payments for services.
 16/05/2005Eastern Caribbean Central BankWe agree with the recommendations of the AEG.
 12/05/2005European Central BankThe ECB agrees with the proposed treatment for originals and copies. We also look forward to receiving the clarifications which have to be made by the Canberra II Group on payments for a license over a period of several years.
 11/05/2005IndiaIndia agrees with the AEG’s decisions. The originals given to other units with licence to reproduce should be treated as fixed capital formation on the part of the licensee and there should be corresponding reduction in the assets of the licensor. Regarding license to use, the qualifying conditions of fixed assets should be applicable, to treat the expenses as fixed capital formation or intermediate consumption.
 10/05/2005USAThe U.S. Bureau of Economic Analysis endorses the recommendations made by the AEG.
 10/05/2005National Bank of MoldovaWe agree with the recommendation of AEG on this subject. The treatment for licenses to reproduce should be carefully considered in view to draw a consistency with its treatment in balance of payments.
 09/05/2005AustraliaAustralia agrees with the AEG recommendations
 09/05/2005MaldivesWe wish to agree with the recommendation of the AEG but there would be some difficulties for the Maldives in implementing the recommendations due to some problem in the data sources.
 09/05/2005United KingdomThis is an item where the United Kingdom expressed a number of concerns during the discussion stage with regard to the proposed treatment of copies that are under licence to use. The nature of the end user licence implies that the ownership of the underlying intellectual property does not change, and so payments for the copies should be recorded as rentals rather than capital expenditure. The proposed treatment will lead to double counting of gross fixed capital formation in the accounts, and so GDP will be over-recorded
 09/05/2005Central Bank of IranWe agree that copies issued under license to use represent new production and when they display the characteristics of fixed assets (being expected to be used repeatedly for more than 1 year) should be recorded as gross fixed capital formation, but we need more guidelines and clarifications on the issue of licenses to reproduce.
 09/05/2005ItalyWe agree with the recommendations of the AEG.
 06/05/2005TurkeyWe agree with the recommendations made by the Advisory Expert Group on National Accounts at its second meeting in December 2004.
 06/05/2005Commonwealth of Independent States We agree with the suggested treatment of expenditures on originals and copies as well as with suggestions on how the transactions in copies should be recorded.
 06/05/2005Macao, SAR ChinaWe agree with the recommendations.
 05/05/2005SwedenWe agree on the following AEG recommendations:
- that copies generated for issue under licenses to use represent new production.
- that when they display the characteristics of fixed assets, copies issued under license to use should be recorded as gross fixed capital formation.
- that a recommendation is needed to clarify in which cases, when payments for a license to use are made over several years, represent the acquisition of an asset rather than a series of payments for services.
- that when a license to reproduce is issued under terms similar to an operational lease, the payments made are treated as payments for services.
We do not agree on the following AEG recommendation:
- that when the holder of an original divests itself of part or all of the responsibility to issue and service copies under licenses to use by means of a license to reproduce, this constitutes the sale of the corresponding part of the asset.
Comment: There should only be one institutional owner of an asset. In the case mentioned by AEG the user clearly is letting other using the asset under a license agreement which should be seen as a service agreement and the corresponding payments as service charges. The fact that more than one institutional unit can benefit from the use of an assets does not constitute all as owners. The owner will normally charge the other users and also account for the consumption of fixed assets. This should be accounted for in the normal way according to SNA93 with the exception of financial leasing.
 04/05/2005DenmarkStatistics Denmark agrees on all the recommendations.
 28/04/2005Trinidad and TobagoWe agree with the recommendations of the AEG.
 25/04/2005Bank of Sierra LeoneWith reference to the above subject we agree with the recommendations of the Expert Group on National Accounts (AEG) especially where there is harmonization of definitions and other concepts between the Balance of Payments (BOP) and system of National Accounts (SNA).
 19/04/2005Lesotho - Central BankHow should expenditures on originals and copies be recorded, should be recorded as expenditure (on new goods) on the basis that originals are distinct from copies, or should originals be considered as being analogous to a `stock` of copies, and so expenditure on a copy partly (or mostly) reflects a sale of an existing good? How should the Transactions in copies be recorded? Comment: The originals should be considered as being analogous to `stock`, and should be recorded as operating cost.
 13/04/2005Bank of Korea We agree that copies generated for issue under licenses-to-use be regarded as new production and be treated as fixed capital assets if the conditions for investment are satisfied(being expected to be used repeatedly for more than 1 year and so on).
 12/04/2005GreeceWe agree with the recommendations of the AEG on the issues for which a decision has been taken, at the December 2004 meeting of the group.
 12/04/2005Central Bank of HondurasLas tres propuestas consideradas analizaron el tratamiento de los originales y las copias, separando las licencias para uso y las licencias para reproducir, que permite tener una visión más puntual al respecto.
 11/04/2005The NetherlandsWe agree with the recommendations made at the December 2004 meeting of the Advisory Expert Group on National Accounts.
 11/04/2005Central Bank of KuwaitKuwait agreed that copies issued under licenses to use represent new production if they generated and when they display the characteristics of fixed assets then should be recorded as gross fixed capital formation.
 11/04/2005Bank of Tanzania/National Bureau of StatisticsWe agree that copies issued under license to use should be recorded as gross fixed capital formation. However, there is a need to explain more on the treatment of multinational companies. For example a Coca cola company plant in Tanzania is recorded as a gross fixed capital formation, but we know that the company is producing coca cola under the license of the parent company in USA. We need more explanation on the treatment of a plant, whether it is a copy or original as per SNA review.
 11/04/2005Hong Kong, ChinaWe support the AEG recommendations. The proposal of treating a license-to-reproduce according to the terms for its issue is consistent with the current concepts of fixed capital formation and intermediate consumption under the national accounts framework. The recommended practice will render clearer guidelines on treatment of licenses-to-reproduce.
 11/04/2005Germany m2(c)de11;
 11/04/2005MalawiI fully endorse the recommendations of the Expert Group on National Accounts.
 11/04/2005Philippines - License to use is generally a one-time payment and is treated as part of intangible fixed assets. Subsequent payments for use of the license, if not part of the payment for the license, are applied as payments for updates of the software. How is this dealt with in the accounts?
-The proposal of the Canberra Group is reasonable. However, in the case of license to reproduce the proposed delineation in this respect seems difficult to implement. How would business record such transactions?
 11/04/2005Russian FederationWe agree with the recommendations made by the AEG on National Accounts.
 11/04/2005South African Reserve Bank We accept the recommendations in principle but need more guidance and examples, particularly a clarification on the concept of “doubling access versus doubling knowledge”.
 11/04/2005South AfricaSouth Africa agrees with the recommendations but needs more guidance and examples in the final report.
 18/03/2005Palestinian Central Bureau of StatisticsPCBS support the decision to consider the copies issued under licenses for use should be reported as gross fixed capital formation.
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