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1993 SNA Update Information - Country comments for issue:
Units

Issue description
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The 1993 SNA specifies that units conducting only a specified list of activities designated as “ancillary” should not be treated as separate units but their costs should be consolidated with the units they serve. This means that when accounts for a region are compiled, head offices and other ancillary units located there are excluded if the units they serve are located outside the region. This results in a difference between ancillary units located abroad, which are treated as separate units, and those that are resident but distant from their related enterprises. Should the principle of not treating ancillary units as separate units be changed and what are the consequences throughout the accounts?
As part of the innovation in financial markets and asset management over the last decade, several forms of separate entities have come into existence that only hold assets or liabilities but do not engage in production. Such entities are separate new or existing legal structures assigned for specific purposes such as specialized portfolio management of assets and debts, restructuring agencies, special purpose entities, shell companies, limited liability partnerships or trusts. Should these entities be treated as ancillary and merged with their related enterprises, or should they be treated as separate units? If they are separate units, to which sector should they be allocated?
The 1993 SNA follows the Balance of Payments Manual in allowing for a single enterprise run as a seamless entity with substantial operations in two or more economic territories to be regarded as having a centre of economic interest in each of the countries where it is recognized by the tax and licensing authorities, but only when the activity is operating mobile equipment such as ships, aircraft and railways. In these cases, the possibility is for all the enterprise’s transactions to be allocated to the countries of registry in proportion to the financial capital that the countries have contributed or their share of equity in the enterprise. Should this treatment be extended to other activities, for example hydro-electric schemes on border rivers and pipelines? Should reference be made to joint sovereignty zones and zones of joint jurisdiction?
The Balance of Payments Manual (BPM) indicates that establishments of enterprises located in a country different from the country of residence of the parent should be treated as notional units, resident in the country where located under certain conditions. The SNA discusses non-resident unincorporated enterprises rather than establishments. Should the SNA and BPM be more closely aligned?
Is special treatment required for non-resident units established abroad by government for fiscal purposes?
Country comments
Number of country comments for selected issue:28
  Date postedSourceComment
 27/11/2006AustraliaWe agree with the recommendations made by AEG at its Jan-Feb 2006 meeting. However, we note that since the meeting the ISWGNA has ruled that “by convention head offices of financial corporations are to be treated as financial auxiliaries in the SNA”. We disagree with this. Our view is that the head offices of financial corporations should be allocated to the sub-sector to which most of the subsidiaries are allocated. For example, if a head office has mostly deposit-taking institution subsidiaries, then the head office should also be allocated to the deposit-taking institution sub-sector, and not to the financial auxiliaries sub-sector.
 11/10/2006ArmeniaThe National Statistical Service of the Republic of Armenia agrees with the most recent AEG recommendations.
 29/09/2006Bank of KoreaWe generally support the recommendations.
 15/09/2006United KingdomWe agree with all the recommendations made by the AEG.
 15/09/2006LatviaAfter deep discussions and expert consultations we basically support the 1993 SNA Update Issues.
 25/08/2006Central Bank of Ecuadorauxiliares, se presenta la dificultad de no disponer de estadísticas para trabajar por separado; por lo general, en el caso ecuatoriano, la información contable se presenta consolidada; las grandes empresas manejan internamente la información pormenorizada, sin embargo, en la práctica no la proporciona a los organismos de control o a las instituciones estadísticas.
 21/08/2006Central Bank of El Salvador m4cbElSalvador25; m4cbElSalvador25-english;
 18/08/2006NetherlandsIn our opinion, some of the questions related to the treatment of units have been clarified significantly by the recommendations proposed. We only have some doubts regarding the treatment of holding companies. We think that, from an economic and analytical point of view, classification of holding companies to the sector of the related subsidiaries may be preferable.
 18/08/2006ItalyWe are in favour of the recommendations to treat ancillary units as separate establishments (when they meet conditions) and holding companies as financial corporations. Nevertheless, we have some concerns about some specific aspects: criteria for defining establishments or holding corporations, consistency with ISIC treatment and residency issue for BOP compilation.
 18/08/2006USAWe agree with the recommendations of the AEG.
 02/08/2006European Central BankThe ECB generally supports the recommendations made by the AEG.
 01/08/2006National Bank/ National Bureau for Statistics MoldovaNational Bank and National Bureau for Statistics of Moldova agree with the recommendations made at the latest meeting of the AEG.
 01/08/2006Reserve Bank of South AfricaWe carefully worked through all the issues and would like to give our general support to the recommendations made by the AEG.
 01/08/2006Central Bank of ChileEn relación a las actividades auxiliares estamos de acuerdo que deben registrarse en establecimientos separados, cuando cumplan los requisitos para su clasificación como establecimientos. De esta forma se registra en adecuadamente la composición del valor agregado por rama de actividad y se logra una mejor medición de las regiones geográficas donde esté localizada la actividad auxiliar. De igual manera estamos de acuerdo con la valoración de las actividades auxiliares como suma de costos más una asignación proporcional del excedente de explotación a los establecimientos que sirve. Esta producción debe registrarse como consumo intermedio de los establecimientos que demandan los productos de estas actividades auxiliares.
Iguales criterios son válidos para las corporaciones auxiliares y las casas matrices de compañías holding, estamos de acuerdo con el tratamiento propuesto, es decir registrarlos como unidades institucionales.
En el caso de las SPEs (Special Purpose Entities), estamos de acuerdo en que se traten como unidades institucionales cuando satisfagan el criterio para calificarlas como tales, y su producción debe ser valorado a costo si no está disponible un método para valorarlas a precio de mercado.
 31/07/2006Macao SARStatistics and Census Service of Macao SAR agrees to the AEG recommendations and has no further comments.
 31/07/2006Bank of IndonesiaBI fully agrees with the principal concept, and has already implemented the concept in classifying restructuring agencies in Indonesia as part of general government.
 31/07/2006Bosnia and HerzegovinaWe agree with AEG recommendations on the update of the 1993 SNA and do not have any further comments.
 28/07/2006Vietnami. Ancillary activities:
We agree that:
- Units undertaking ancillary activities should be recognize as separate establishment (ancillary units) when they satisfy the conditions to be an establishment and should be classified according to their own economic activity.
- Output of ancillary units should be value by sum of cost plus a proportional allocation of the operating surplus of the establishment it serves
- Operating surplus of establishments is serves may be allocated to the ancillary unit by share of their output, value added research organizations employment or turnover.
However, measuring operating surplus of establishment it serves may be difficulty.
- We also agree that: output of ancillary units should be allocated as intermediate consumption to establishments they serves.
ii. Ancillary corporations:
- We agree that ancillary corporations should be recognized as institutional units and should be classified in their own right when they satisfy the criteria for qualifying as institutional unit and also agree with treatment way of the AEG in these points.
iii. Holding companies:
- We do not agree parent companies without significant production recognized as holding companies should be classified as “other financial intermediaries”. Because without significant production that do not mean they can not produce production; other hand, for sampling of collection of data and calculation …etc. We think that parent companies with significant production should be a separate institutional unit.
iv. Special purpose entities
- We agree with recommendation and outcomes with the AEG in this issue
v. Trust funds and investment funds
- We agree with recommendation and outcomes of the AEG
vi. Restructuring agencies
- We agree with outcomes of the AEG
vii. Output of ancillary units
We recognize that output of ancillary units should be recorded as market output when it is classified as part of the financial or non- financial corporations sector and non- market output when it is classified in the general.
 28/07/2006FranceL’INSEE accueille favorablement les conclusions de la réunion de Francfort.
 28/07/2006National Bank of SlovakiaConcerning the results of the most recent AEG meeting, we fully support the conclusions and recommendations made by the AEG.
 28/07/2006Bank of PortugalWe generally agree with the recommendations. However it is important to have a comprehensive recording of all entities, with the establishment of borderlines between institutional units and ancillaries based on statistical criteria, namely the existence of a complete and, separate set of accounts, the planning to operate the business indefinitely/for a long period and the subjection to income tax.
Regarding the Special Purpose Entities (SPE), Banco de Portugal is improving FDI statistics in the medium-term towards a separate identification of SPE.
 28/07/2006Bank of PolandPlease find our general support for the AEG recommendations made during its recent meeting in Frankfurt.
 27/07/2006Bank of Sierra LeoneWe agree with the recommendations made by the AEG.
 27/07/2006EgyptThe treatment of the ancillary unit should remain as it is in present SNA. That it should not be treated as separate unit and its cost should be consolidated with the unit it serves.
 25/07/2006Bank of ItalyWe broadly support the conclusions.
 24/07/2006National Bank of the Republic of AzerbaijanWe have analyzed the “Comment on the recommendations of the most recent Advisory Expert Group on National Accounts (AEG) meeting (January 30 – February 8, 2006) in Frankfurt” within the scope of our responsibilities and I am pleased to inform you that we are in agreement with the AEG recommendations.
 24/07/2006Germany m4Germany25;
 10/07/2006DenmarkAgreement
It is our understanding, that the AEG considers the recommendations on the treatment of ancillary units to be a clarification, but that no changes in the concept compared to SNA 1993 is intended. (cf. Anne Harrison, “Full set of recommendations”, p. 33-34, paper presented to the Conference of European Statisticians, Geneva 25-28 April 2006. ECE/CES/GE.20/2006/SP6).
Generally it is important, that the proposed changes in and clarifications of concepts are co-ordinated with proposals of other international manuals concerning the same concepts (i.e. ISIC)
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