Chapter

5. Revenue

Author(s):
Sage De Clerck, and Tobias Wickens
Published Date:
March 2015
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This chapter defines the concept of revenue and describes the manner in which revenue is classified.

Defining Revenue

5.1 Revenue (1) is an increase in net worth resulting from a transaction. Revenue transactions, as defined in GFS, have counterpart entries either in an increase in assets or in a decrease in liabilities—thereby increasing net worth. General government units have four types of revenue: (i) compulsory levies in the form of taxes and certain types of social contributions; (ii) property income derived from the ownership of assets; (iii) sales of goods and services; and (iv) other transfers receivable from other units. Of these, compulsory levies and transfers are the main sources of revenue for most general government units. Public corporations do not levy taxes, but derive their revenue from all the other sources—of these, property income and the sales of goods and services are the main sources of revenue.

5.2 Taxes (11)1 are compulsory, unrequited amounts receivable by government units from institutional units. Taxes can be receivable in cash2 or in kind.3 By its nature, only a government unit can receive revenue in the form of taxes. When an institutional unit other than a government unit collects taxes, the tax should be attributed in accordance with tax attribution guidelines (see paragraphs 5.33–5.40). Tax revenue is considered to be unrequited because the government provides nothing directly to the individual unit in exchange for the payment. Governments may use the tax revenue to provide goods or services to other units, either individually or collectively, or to the community as a whole. Certain compulsory receivables, such as fines, penalties, and most social security contributions, are not considered taxes (see paragraph 5.23). These types of revenue have, under certain conditions, an element of exchange and are therefore not classified as taxes.

5.3 All other types of revenue are frequently combined into a heterogeneous broad category: revenue other than taxes (also sometimes referred to as nontax revenue). In this manual, however, the various other types of revenue are separately identified and classified as social contributions, grants, and other revenue.

5.4 Socialcontributions[GFS]4 (12) are actual or imputed revenue receivable by social insurance schemes to make provision for social insurance benefits payable.5 Social contributions may be from employers on behalf of their employees, from employees, or from self-employed or unemployed persons on their own behalf. These contributions secure entitlement to social benefits payable to the contributors, their dependents, or their survivors when certain social risks arise. The contributions may be compulsory or voluntary (see paragraph 5.94 and Appendix 2).

5.5 Grants (13) are transfers receivable by government units from other resident or nonresident government units or international organizations, and that do not meet the definition of a tax, subsidy, or social contribution. When statistics are compiled for the general government sector, grants from other domestic government units would be eliminated in consolidation so that only grants from foreign governments and international organizations would remain in the general government accounts. Grants may be classified as capital or current and can be receivable in cash or in kind (see paragraphs 5.103–5.105).

5.6 Otherrevenue (14) is all revenue receivable excluding taxes, social contributions, and grants. Other revenue comprises: (i) property income; (ii) sales of goods and services; (iii) fines, penalties, and forfeits; (iv) transfers not elsewhere classified; and (v) premiums, fees, and claims related to nonlife insurance and standardized guarantee schemes (see paragraphs 5.106–5.151).

5.7 Refunds (see paragraph 5.27) and corrections of erroneously collected revenue are transactions that decrease the net worth of the recipient government unit. More accurately, they are adjustments that allow the excessive increase in net worth previously recorded to be corrected. These refund transactions are recorded as a reduction in revenue, with a corresponding reduction in financial assets or an increase in liabilities.6

5.8 Some transactions are exchanges in assets and/or liabilities and should not be recorded as revenue. The disposal of a nonfinancial asset, other than inventories,7 by sale or barter does not affect net worth and these transactions are not revenue. They are transactions in nonfinancial assets as described in paragraphs 8.3–8.4. However, when ownership of an asset is acquired without having to give up anything of commensurate value in return, the net worth of the unit increases. This increase in assets has a counterpart entry in an increase in revenue and should be recorded as a type of capital transfer receivable, such as a capital grant. Repayments on loans previously extended to other institutional units, and loan disbursements, are not revenue. These are transactions in financial assets or liabilities as described in paragraphs 9.3–9.4.

5.9 For the purposes of fiscal analysis, additional aggregations of revenue could be calculated, such as the fiscal burden, direct versus indirect taxes, and revenue related to natural resources. A discussion of these supplementary fiscal indicators and their uses in fiscal analysis is presented in the annex to Chapter 4.

Time of Recording and Measurement of Revenue

5.10 In the Statement of Operations, revenue should be recorded according to the accrual basis of recording. In the accrual basis of recording, transactions are recorded when the underlying activities, transactions, or other events occur that create the unconditional claims to receive the taxes or other types of revenue (see paragraphs 3.69–3.102). The application of the general rule to various types of revenue is indicated in each section of the classification as needed.

5.11 In the Statement of Sources and Uses of Cash, cash receipts from operating activities are recorded in accordance with the cash basis of recording. In the cash basis of recording, transactions are recorded when cash payments for the respective revenue categories are received (see paragraph 3.103–3.104).

5.12 According to the accrual principles of GFS, income taxes and social contributions based on income should be attributed to the period in which the income is earned, even though there may be a significant delay between the end of the reporting period and the time at which it is feasible to determine the actual liability of the taxpayer.

5.13 Conceptually, when using the accrual basis of recording, the time between the moment a revenue transaction accrues and the payment is received (or made in the case of refunds) is bridged by recording a transaction in financial assets or liabilities (see paragraph 7.224). In cases where a prepayment of revenue covering two or more reporting periods is made to government, government should record an increase in liabilities, usually recorded in other accounts payable (3308), for the revenue that falls due in future periods. In effect, this is a financial advance made to government by the payee. It constitutes a liability of the government and an asset of the payee. This liability is extinguished as the revenue falls due in future periods.

5.14 In practice, however, some flexibility is permitted as the accrual recording of revenue can be difficult to implement because government accounting systems often record revenue only on a cash basis. This is especially the case for taxes. Further, even when accrued taxes are estimated from assessments of taxes due, there may be a risk of over- or understatement of tax revenue. The remainder of this section provides additional practical guidance on the appropriate time of recording for taxes.

5.15 As a practical deviation from the general principle, income taxes deducted at source, such as pay-as-you-earn taxes, and regular prepayments of income taxes may be recorded in the periods in which they are paid and any final tax liability on income may be recorded in the period in which the liability is determined.

5.16 It is also possible that governments receive cash amounts before having an unconditional claim on them.8 Such circumstances include advances for provision of goods and services to be delivered in the future, and grants for the construction of fixed assets over several periods. When using the accrual basis of recording, these cash receipts cannot be recognized as revenue until such time as the government acquires the unconditional claim on the amount. However, when using the cash basis of recording, the full amount of revenue will be recognized in the period in which the cash amounts were received, irrespective of whether the service, delivery, or compliance with the conditions were met in the past or will be met in the future.

5.17 With the exception of taxes and social contributions, the amount of revenue to be recorded on the accrual basis is the entire amount to which the general government unit has an unconditional claim. In the case of taxes and social insurance contributions, only those amounts that are evidenced by assessments and declarations, customs declarations, and similar documents are considered to constitute revenue for government units.

5.18 As indicated in paragraph 3.78, the amount of taxes and social contributions recorded must take into account that the government unit receiving the revenue is usually not a party to the transaction or other event that creates the obligation to pay the taxes or social insurance contributions. Consequently, many of these transactions and events permanently escape the attention of the tax authorities. The amount of revenue from taxes and social insurance contributions should exclude the amounts that possibly could have been received from such unreported events had the government learned about them, but instead permanently escape the attention of the tax authorities.

5.19 Furthermore, in some countries, and for some taxes, the amounts of taxes eventually paid may diverge substantially and systematically from the amounts due to be paid. It would be inappropriate to accrue revenue for an amount that the government unit does not realistically expect to collect. The amount that is realistically expected to be collected may sometimes be influenced by tax amnesties. Governments use tax amnesties to capture some of the taxes accrued but unpaid, to speed up payment of taxes, and to capture revenue from transactions or events that have previously escaped the attention of the tax authorities. The time of recording and measurement of revenue arising from such tax amnesties depends on the exact nature of the amnesty granted and whether the revenue has been previously accrued. The case of adjusting for underestimation or overestimation of tax revenue is discussed later.

5.20 It is typical that some of the taxes and social insurance contributions that have been assessed and accrued will never be collected. Thus, the difference between estimates based on these assessments and expected collections represents a claim that has no real value and should not be recorded as revenue. If transactions are recorded for such taxes (and other revenue) that overestimate the amount of revenue receivable, a correction should be recorded in the GFS framework. This requires an adjustment that allows the excessive increase in net worth previously recorded to be corrected.9 In keeping with the accrual basis of recording (see paragraph 3.79), such an adjustment should occur in the period in which the overestimation of receivables occurred. However, in cases where it is not possible to identify the time of the overes-timation, the adjustment is recorded when the need for the adjustment is identified. As such, a correction to reduce revenue, with a corresponding correction (reduction) in other accounts receivable (3208), should be recorded. The amount of taxes and social insurance contributions that is recorded as revenue should be the amount that is realistically expected to be receivable. The actual collection, however, may be in a later period, possibly much later.

The Classification of Revenue

5.21 Revenue comprises heterogeneous elements, classified according to different characteristics depending on the type of revenue. For taxes, the classification scheme is determined mainly by the base on which the tax is levied. Revenue other than taxes is classified by the nature of the economic flow, and in some cases by the source from which the revenue is derived. The summary classification of revenue in the GFS framework is shown in Table 5.1, and the remainder of this chapter describes each category in detail.

Table 5.1Summary Classification of Revenue
1Revenue12Social contributions [GFS]
11Taxes121Social security contributions [GFS]
111Taxes on income, profits, and capital gains1211Employee contributions [GFS]
1111Payable by individuals1212Employer contributions [GFS]
1112Payable by corporations and other enterprises1213Self-employed or unemployed contributions [GFS]
1113Other taxes on income, profits, and1214Unallocable contributions [GFS]
capital gains1122Other social contributions [GFS]
112Taxes on payroll and workforce1221Employee contributions [GFS]
113Taxes on property1222Employer contributions [GFS]
1131Recurrent taxes on immovable property1223Imputed contributions [GFS]
1132Recurrent taxes on net wealth13Grants
1133Estate, inheritance, and gift taxes131From foreign governments
1135Capital levies
1136Other recurrent taxes on property1311Current
114Taxes on goods and services1312Capital
1141General taxes on goods and services132From international organizations
11411Value-added taxes1321Current
11412Sales taxes1322Capital
11413Turnover and other general taxes on133From other general government units1
goods and services1331Current
11414Taxes on financial and capital transactions1332Capital
1142Excise14Other revenue
1143Profits of fiscal monopolies141Property income [GFS]
1144Taxes on specific services1411Interest [GFS]1
1145Taxes on use of goods and on permission1412Dividends1
to use goods or perform activities1413Withdrawals of income from
11451Motor vehicle taxesquasi-corporations
11452Other taxes on use of goods and on

permission to use goods or perform
1414Property income from investment income

disbursements
activities11415Rent
1146Other taxes on goods and services1416Reinvested earnings on foreign direct investment
115Taxes on international trade and transactions142Sales of goods and services
1151Customs and other import duties1421Sales by market establishments
1152Taxes on exports1422Administrative fees
1153Profits of export or import monopolies1423Incidental sales by nonmarket establishments
1154Exchange profits1424Imputed sales of goods and services
1155Exchange taxes143Fines, penalties, and forfeits
1156Other taxes on international trade and144Transfers not elsewhere classified
transactions1441Current transfers not elsewhere classified
116Other taxes14411Subsidies1
1161Payable solely by business14412Other current transfers not elsewhere classified1
1162Payable by other than business or1442Capital transfers not elsewhere classified
unidentifiable145Premiums, fees, and claims related to nonlife insurance and standardized guarantee schemes1
1451Premiums, fees, and current claims1
1452Capital claims

indicates that a further breakdown may be analytically useful and is presented in detailed tables.

indicates that a further breakdown may be analytically useful and is presented in detailed tables.

5.22 While the summary GFS revenue classification structure provides guidance on the minimum requirements for internationally comparable classifications of revenue, analytical needs may necessitate further detailed classifications to be added as subitems in national data presentations. Additional subitems, presented either as a comprehensive breakdown of the standard item or as “of which” lines, could be used to identify items required:

  • To facilitate consolidation—for example, a breakdown of items according to the subsectors and institutional units of general government (see paragraph 3.152)

  • As input into other macroeconomic datasets to enhance consistency with these data—for example, a breakdown of interest to identify recipients according to residence and sectors (see paragraph 7.264)

  • To facilitate the calculation of supplementary aggregates or balances used as fiscal indicators in fiscal analysis—for example, identifying all revenue related to a particular resource could allow the calculation of government balances without such resource revenue (see paragraph 4.59), or identifying all environment-related revenue and payments to government could facilitate the compilation of environmental accounts (see paragraph A7.107).

Taxes (11)

5.23 Taxes are compulsory, unrequited amounts receivable by government units from institutional units. In GFS, taxes are classified mainly according to the base on which the tax is levied. Normally, designating a tax for a particular use does not affect its classification. An exception is the distinction between taxes on payroll and workforce and social security contributions. If a tax on payroll or workforce is designated for use in a social security scheme, then it is classified as a social security contribution (see paragraphs 5.45 and 5.96). Otherwise, it is classified under taxes on payroll and workforce. Taxes also exclude compulsory payments receivable by government, as contributions to employment-related pension schemes. Since these compulsory contributions are associated with the expectation of future benefits payable, they are not tax revenue receivable, but rather recorded as the incurrence of a pension entitlement liability (see paragraphs 9.63–9.67).

5.24 In principle, interest charged on overdue taxes or fines and penalties imposed for the attempted evasion of taxes should be recorded as interest (1411), or fines, penalties, and forfeits (143) and not as taxes. However, it may not be possible to separate receivables of interest, fines, or other penalties from the taxes to which they relate, so in practice they are usually grouped with the relevant tax receivable (see also paragraph 6.82).

GFS tax classifications in comparison with other statistical databases

5.25 The coverage, timing, and valuation of tax revenue in GFS and the 2008 SNA are identical, but the classification systems differ. The 2008 SNA classifies taxes according to their role in economic activities—namely: (i) taxes on production and imports (D2); (ii) current taxes on income, wealth, etc. (D5); and (iii) capital taxes (D91). The result is that some categories of taxes in GFS need to be allocated between two of the SNA tax categories according to whether they are payable by producers or final consumers, or whether they are current or capital taxes.10 In GFS, taxes are classified into six major categories: (i) taxes on income, profits, and capital gains; (ii) taxes on payroll and workforce; (iii) taxes on property; (iv) taxes on goods and services; (v) taxes on international trade and transactions; and (vi) other taxes. These categories are described in the various sections on the respective tax categories.

5.26 The classification of taxes in this manual is quite similar to the classification employed in Revenue Statistics, which is published annually by the Organisation for Economic Co-operation and Development. The two primary differences in the classification structure are that in Revenue Statistics, compulsory social security contributions are treated as taxes and the categories of taxes on goods and services, and taxes on international trade and transactions are combined into a single category. In addition, at a detailed classification level, Revenue Statistics differs in the following aspects: (i) payable tax credits are recorded as negative taxes to the extent that the payable tax credit offsets existing income tax receivable; (ii) imputed taxes or subsidies resulting from the central bank imposing a rate of interest other than the market rate are excluded from Revenue Statistics; and (iii) imputed taxes or subsidies resulting from the operation of multiple exchange rate systems are excluded from Revenue Statistics.

Treatment of tax refunds and tax relief

5.27 Tax refunds are adjustments for overestimation of taxes payable or the return of amounts to taxpayers due to overpayments. Tax refunds generally are recorded as a reduction in the appropriate tax category. When using the accrual basis of recording, refunds are attributed to the period in which the event occurred that generated the overassessments or overpayments. However, in cases where it is not possible to identify the time of the overestimation, the adjustment is recorded at the time when the need for the adjustment is identified. When using the cash basis of recording, such refunds should be recorded at the time the payment occurs. In the case of a value-added tax, taxpayers other than final consumers normally are allowed a refund of taxes paid on purchases. Even if this refund exceeds the taxes payable by an individual taxpayer, the net refund is recorded as a reduction in that category of tax.

5.28 Tax relief measures are incentives that reduce the amount of tax owed by an institutional unit. Tax relief can take the form of a tax allowance, an exemption, a deduction, or a tax credit. Tax allowances, exemptions, and deductions are subtracted from the tax base before the tax liability is computed—it reduces the taxable amount before assessing the tax. These tax relief measures are also known as tax expenditures. Tax expenditures are concessions or exemptions from a “normal” tax structure that reduce government revenue collection. No tax expenditures are recorded as flows in the GFS. However, because the government policy objectives could be achieved alternatively through a subsidy or other direct outlays, for fiscal transparency purposes, all tax expenditures should be reported in supplementary reports.

5.29 A tax credit is an amount subtracted directly from the tax liability due by the beneficiary household or corporation after the liability has been computed. Tax credits can be payable or nonpayable. Tax credits can be payable, in the sense that any amount of the credit that exceeds the tax liability is paid to the beneficiary. Under a payable tax credit system, the credits payable can be awarded to nontaxpayer beneficiaries, as well as taxpayers. In contrast, tax credits that are nonpayable (sometimes called “wastable”) are limited at most to the size of the tax liability of the taxpayer.

5.30 Tax relief that is embedded in the tax system reduces the taxes receivable from the taxpayer and therefore reduces government tax revenue. This is the case for tax allowances, exemptions, and deductions because they enter directly into the calculation of the tax liability. Tax relief granted in this form of nonpayable tax credits should also be recorded as a reduction in the relevant tax category.

5.31 However, when tax relief is granted in the form of payable tax credits, it should be recorded on a gross basis: the total amount of tax receivable should be recorded as tax revenue of government and the total amounts due as payable tax credits should be recorded as expense. Payable tax credits are often not connected with the assessment of the taxable event, and should be shown as a current transfer classified according to the purpose of the credit and the nature of the recipient:

  • The transfer is a subsidy (25) if receivable by an enterprise on the basis of the level of its production activities or the quantities or values of the goods or services it produces, sells, exports, or imports (see paragraph 6.84).

  • The transfer is an implicit social assistance benefit (272) if receivable by households intended to provide for the needs that arise from certain events or circumstances (see paragraph 6.101), or

  • The transfer is classified as transfers not elsewhere classified (282) if receivable by individuals, private nonprofit institutions, nongovernmental foundations, corporations, or government units, and the nature of the transfer is not such that it could be included in the other categories of transfers (see paragraph 6.122).

5.32 Payable tax credits should be recorded for the full amount when the tax claim is recognized by government regardless of the time when it is paid in cash by government or used to decrease the amount of taxes to be paid to government. Gross recording of the payable tax credit allows GFS to reflect the economic substance of government intervention in the economy.11 This treatment differs from the treatment of the imputation system of corporate income tax (see paragraph 5.44).

Tax attribution12

5.33 In some cases, one government unit collects taxes and then transfers some or all of them to another government unit or international organization. Depending on the arrangement, the taxes passed on to the second government unit may be reassigned as tax revenue of that unit or they can be recorded as tax revenue of the collecting unit and a grant from that unit to the second government unit.

5.34 A tax is attributed to the government unit that: (i) exercises the authority to impose the tax (either as a principal or through the delegated authority of the principal); and (ii) has final discretion to set and vary the rate of the tax.

5.35 Where an amount is collected by one government for and on behalf of another government, and the latter government has the authority to impose the tax, and to set and vary its rate, then the former is acting as an agent for the latter. The full amount of tax raised is assigned as tax revenue to the government on whose behalf the collection was made. Any amounts retained by the collecting government as a collection charge should be recorded as a payment for a service, classified as the relevant category of sales of goods and services (142). The same amount is recorded as an expense for use of goods and services (22) by the counterparty. Any other amounts retained by the collecting government, such as under a tax-sharing arrangement, should be recorded as current grants (1331) receivable while the counterparty will record current grants (2631) payable. If the collecting government was delegated the authority to set and vary the rate, then the amount collected should be recorded as tax revenue of the collecting government.

5.36 Where different governments jointly and equally set the rate of a tax, with no individual government having ultimate overriding authority, then the tax revenues are attributed to each government according to its respective share of the proceeds.13 If an arrangement allows one government unit to exercise ultimate overriding authority, then all of the tax revenue is attributed to that unit.

5.37 There may also be circumstances where a tax is imposed under the constitutional or other authority of a government unit or an international organization,14 but participating governments individually set the tax rate in their jurisdictions. The proceeds of the tax generated in each respective government’s jurisdiction are attributed as tax revenues to the individual government units.

5.38 When taxes are collected by an institutional unit other than a government unit, the tax is always reassigned to the government unit that permitted the nongovernment unit to act as a collecting agent (see paragraph 5.2). For example, a public corporation may act as an agent to collect a specific tax on behalf of government. In this case, the taxes collected by the public corporations should be recorded as transactions in financial assets and liabilities for the collecting agent, and the full amount collected should be recorded as tax revenue receivable by the government unit. Amounts retained by the collecting unit as a collection charge should be recorded as a payment for a service receivable by the collecting unit and payable by the government unit.

5.39 The attribution of church or “zakat” taxes requires some further consideration. The treatment of these taxes depends on the sector classification of the religious institutional units (see paragraph 2.61). In countries where some of the activities of the religious organizations are funded from earmarked taxes raised by general government, such as church or zakat taxes, these are included in the tax component of government revenue, provided they meet the definition of taxes set out in paragraphs 5.2 and 5.23. The base on which such religious taxes are levied can vary from country to country (the most usual cases are income, property, or net wealth). These taxes should be classified in the tax category that best describes the tax base on which they are levied.

5.40 When the religious organizations are not part of general government,15 historical and administrative reasons may still determine that contributions to religious organizations are collected through the tax authorities. In this case, the contributions should be recorded as financial transactions classified in other accounts payable (3308). Amounts retained by the tax authority as a collection charge should be recorded as sales of goods and services (142) receivable from the religious organizations. The collected amounts are not taxes and are therefore not included in tax revenue if any of the following conditions apply:

  • Individuals may opt out of the “tax” payment by formally declaring to the tax authorities their wish to leave the religious organizations.

  • Government is acting in a collection agency capacity on behalf of the religious organizations.

  • Government does not exercise the authority to impose a compulsory contribution, or

  • Government has limited or no discretion to set and vary the rate of the contributions.16

Tax categories

Taxes on income, profits, and capital gains (111)

5.41 Taxes on income, profits, and capital gains (111) consist of taxes assessed on the actual or presumed incomes of institutional units. They include taxes assessed on holdings of property, land, or real estate when these holdings are used as a basis for estimating the income of their owners. These taxes, often referred to as income taxes, include:

  • Taxes on individual or household income—These consist of personal income taxes, including those deducted by employers (pay-as-you-earn taxes) and surtaxes. Such taxes are usually levied on the total declared or presumed income from all sources of the person concerned: compensation of employees (e.g., wages, salaries, tips, fees, commissions, fringe benefits), property income (e.g., interest, dividends, rent, royalty incomes), and pensions (taxable portions of social security, pension, annuity, life insurance, and other retirement benefit distributions), etc., after deducting certain allowances in accordance with tax laws. Taxes on the income of the owners of unincorporated enterprises17 are included here. Also included are income taxes on the income of family estates and trusts where the beneficiaries are individuals.

  • Taxes on the income of corporations—These consist of corporate income taxes, corporate profits taxes, corporate surtaxes, etc. Such taxes are usually assessed on the total incomes of corporations—with corporations understood as in macroeconomic statistics. This item includes taxes on the income of units such as partnerships, sole proprietorships, estates,18 and some trusts that are recognized as corporations. This covers income from all sources and not simply profits generated by production. Also included are income taxes on trusts where the beneficiaries are corporations.

  • Taxes on capital gains—These consist of taxes on the capital gains (including capital gains distributions of investment funds) of persons or corporations that become payable during the current reporting period, irrespective of the periods over which the gains have accrued. They are usually payable on nominal, rather than real, capital gains and on realized, rather than unrealized, capital gains.

  • Taxes on winnings from lotteries or gambling— These are taxes payable on the amounts receivable by winners. They do not include taxes on the turnover of producers that organize gambling or lotteries, which are recorded as taxes on goods and services.

5.42 Taxes on income, profits, and capital gains are attributed as being payable by either individuals (1111) or corporations and other enterprises (1112). These individuals, corporations, and other enterprises may be resident or nonresident institutional units. Taxes on income, profits, and capital gains are classified as other taxes on income, profits, and capital gains (1113) when these taxes are payable by general government units, or when information needed to determine whether taxes should be attributed to individuals, corporations, or general government units is not available. In the event that general government units are subject to this tax category, these taxes should be classified under this category, identifiable according to the subsector of the taxpayer to allow for consolidation (see paragraphs 6.122–6.123). Similarly, taxes payable by public corporations are subject to consolidation and should be identified as a subcategory of taxes payable by corporations (see Table 5.2). Income taxes on trusts, estates, capital gains, or winnings from lotteries and gambling may fall under income taxes payable by individuals (1111), payable by corporations and other enterprises (1112), or other taxes on income, profits, and capital gains (1113), depending on the institutional unit that benefited from the income (see paragraph 5.41). Income taxes payable by nonprofit institutions serving households or corporations are recorded as taxes on corporations. These taxes may be levied on actual or presumed income and profits, and usually only on realized capital gains. The amount of income subject to tax is usually less than gross income because various deductions are permitted. A profits tax is levied on revenue minus allowable deductions.

Table 5.2Detailed Classification of Taxes on Income, Profits, and Capital Gains (111)
111Taxes on income, profits, and capital gains
1111Payable by individuals
1112Payable by corporations and other enterprises1,2
1113Other taxes on income, profits, and capital gains
11131Payable by general government1,2
11132Unallocable taxes on income, profits, and capital gains

Further breakdown/“of which” lines could allow for the identification of subsectors and individual units (see Table 3.1).

Further breakdown/“of which” lines could allow for the identification of those taxes related to specific natural resources or environmental taxes.

Further breakdown/“of which” lines could allow for the identification of subsectors and individual units (see Table 3.1).

Further breakdown/“of which” lines could allow for the identification of those taxes related to specific natural resources or environmental taxes.

5.43 When using the accrual basis of recording, income taxes are normally imposed on the income earned during an entire year. In the absence of high-frequency source data, indicators of seasonal activity or other appropriate indicators may be used to allocate the annual totals when monthly or quarterly statistics are compiled. When using the cash basis of recording, income taxes are recorded when the tax payment is received.

5.44 Under imputation systems of corporate income tax, shareholders are wholly or partially relieved of their liability for an income tax on dividends paid by the corporation out of income or profits liable to corporate income tax. The relief is usually called a tax credit, although it actually is a means of allocating a tax among taxpayers. If the relief exceeds a shareholder’s total tax liability, the excess may be payable to the shareholder. Because this “tax credit” is an integral part of the imputation system of corporate income tax, any net payment to shareholders is recorded as a negative tax rather than expense. This treatment differs from the general treatment of tax credits described in paragraph 5.29. The total tax paid by the corporation is attributed to corporations and other enterprises (1112). The associated tax credit is for the benefit of the shareholders.

Taxes on payroll and workforce (112)

5.45 Taxesonpayrollorworkforce (112) are taxes payable by enterprises assessed either as a proportion of the wages and salaries paid or as a fixed amount per person employed. They do not include:

  • Payments earmarked for social security schemes, which are classified as social security contributions (121)

  • Taxes paid by the employees themselves out of their wages or salaries, which are classified as taxes on income, profits, and capital gains, payable by individuals (1111).

Taxes on property (113)

5.46 Taxesonproperty (113) are taxes payable on the use, ownership, or transfer of wealth. The taxes may be levied at regular intervals, one time only, or on a change in ownership.

5.47 Taxes on the ownership or use of specific types of property often are based on the value of the property at a particular time but, when using the accrual basis of recording, are deemed to accrue continuously over the entire year, or the portion of the year that the property was owned, if less than the entire year.19 Taxes on the transfer of wealth are recorded at the time of the transfer, and some taxes on the ownership or use of property are recorded at a specific time, such as a one-time tax on net wealth. When using the cash basis of recording, these property taxes are recorded when the cash is received.

5.48 Taxes on property are divided into five categories: (i) recurrent taxes on immovable property; (ii) recurrent taxes on net wealth; (iii) estate, inheritance, and gift taxes; (iv) capital levies; and (v) other recurrent taxes on property.

5.49 Recurrenttaxesonimmovableproperty (1131) cover taxes levied regularly on the use or ownership of immovable property, which includes land, buildings, and other structures. The taxes can be levied on proprietors, tenants, or both. The amount of the taxes is usually a percentage of an assessed property value that is based on a notional rental income, sales price, capitalized yield, or other characteristics, such as size or location. Unlike recurrent taxes on net wealth (1132), liabilities incurred on the property are usually not taken into account in assessment of these taxes.

5.50 Recurrent taxes on net wealth (1132) cover taxes levied regularly on net wealth. Net wealth is usually defined as the value of a wide range of movable and immovable property minus liabilities incurred on that property.

5.51 Estate, inheritance, and gift taxes (1133)20 cover taxes on transfers of property at death and on gifts, including gifts made between living members of the same family to avoid, or minimize, the payment of inheritance taxes. Taxes on the transfer of property at death include estate taxes, which are usually based on the size of the total estate, and inheritance taxes, which may be determined by the amount received by beneficiaries and/or their relationship to the deceased.

5.52 Capital levies (1135)21 cover taxes on the values of the assets or net worth owned by institutional units levied at irregular and very infrequent intervals of time. Capital levies are recorded as exceptional both by units concerned and by the government. They may be payable by households or enterprises. They include taxes on net wealth levied to meet emergency expenditures or to effect a redistribution of wealth; taxes on property, such as betterment levies, that are taxes on the increase in the value of agricultural land due to planning permission being given by government units to develop the land for commercial or residential purposes; taxes on the revaluation of capital; and any other exceptional taxes on particular items of property.

5.53 Other recurrent taxes on property (1136) include all recurrent taxes on property other than immovable property or net wealth. This category includes recurrent gross taxes on personal property, jewelry, cattle, other livestock, other particular items of property, and external signs of wealth. Taxes on the use of particular types of movable property, such as motor vehicles and guns, are classified in taxes on use of goods and on permission to use goods or perform activities (1145).

5.54 While sharing certain characteristics with taxes on property, the following taxes are classified elsewhere:

  • Taxes on immovable property that are levied on the basis of a presumed net income should be recorded as taxes on income, profits, and capital gains (111).

  • Taxes on the use of property for residence, where the tax is payable by either proprietor or tenant and the amount payable is a function of the user’s personal circumstances, such as net income or the number of dependents, are recorded as taxes on income, profits, and capital gains (111).

  • Taxes on construction, enlargement, or alteration of all buildings, or those whose value or use density exceeds a certain threshold, are included in taxes on use of goods and on permission to use goods or perform activities (1145).

  • Taxes on use of one’s own property for special trading purposes, such as selling alcohol, tobacco, or meat, should be recorded under taxes on use of goods and on permission to use goods or perform activities (1145).

  • Taxes on exploitation of natural resources, such as land and subsoil assets not owned by government units, including taxes on extraction and exploitation of minerals and other resources, should be recorded in other taxes on goods and services (1146). Payments to a government unit as the owner of land and subsoil assets for the exploitation of such natural resources (often referred to as royalties) should be recorded in rent (1415). Payments for licenses that allow the beneficiary to carry out the business of exploitation of land and subsoil assets are classified in taxes on use of goods and on permission to use goods or perform activities (1145).

  • Taxes on capital gains resulting from the sale of property are included in taxes on income, profits, and capital gains (111).

Taxes on goods and services (114)

5.55 Taxes on goods and services (114) are taxes that become payable as a result of the production, sale, transfer, leasing, or delivery of goods and rendering of services, or as a result of their use for own consumption, or own capital formation. Taxes on goods and services are divided into six categories, as described in paragraphs 5.57–5.82:

  • General taxes on goods and services (1141), whether levied at manufacturer/producer, wholesale, or retail level—including single-stage taxes and cumulative multistage taxes, where “stage” refers to stage of production or distribution

  • Excises (1142)

  • Profits of fiscal monopolies (1143)

  • Taxes on specific services (1144)

  • Taxes on the use of goods and on permission to use goods or perform activities (1145), comprising various types of licenses to use motor vehicles and other goods, or to perform specific activities

  • Other taxes on goods and services (1146) that include taxes levied on the extraction, processing, or production of minerals and other products.

5.56 This category does not include taxes levied on international trade and transactions (115) but does include taxes levied upon importation, or at the border, if the tax liability does not result solely from the fact that the goods have crossed the border and is applicable to domestic goods or transactions as well.

General taxes on goods and services (1141)

5.57General taxes on goods and services (1141) are levied on the production, leasing, delivery, sale, purchase, or other change of ownership of a wide range of goods and the rendering of a wide range of services (see Table 5.3). General taxes on goods and services may be levied regardless of whether the goods or services are produced domestically or imported, and they may be imposed at any stage of production or distribution. Adjustments made in connection with these taxes when goods cross a border are included in this tax category. Conversely, refunds of these taxes when goods are exported are recorded as a reduction of the taxes within this category. This item excludes customs and other import duties (1151) and taxes on exports (1152). When taxes are levied on a limited range of goods rather than a wide range, they are included in excises (1142). Borderline cases are resolved on the basis of the predominant character of the tax.

Table 5.3Detailed Classification of General Taxes on Goods and Services (1141)
1141General taxes on goods and services
11411Value-added taxes1,2
11412Sales taxes1,2
11413Turnover and other general taxes on goods and services1,2
11414Taxes on financial and capital transactions1,2

Further breakdown/“of which” lines could allow for the identification of subsectors and individual units (see Table 3.1).

Further breakdown/“of which” lines could allow for the identification of these taxes related to specific natural resources or environmental taxes.

Further breakdown/“of which” lines could allow for the identification of subsectors and individual units (see Table 3.1).

Further breakdown/“of which” lines could allow for the identification of these taxes related to specific natural resources or environmental taxes.

Value-added taxes (11411)

5.58 Value-added taxes (VAT) (11411) are taxes on goods or services collected in stages by enterprises but that are ultimately charged in full to the final purchasers. This tax is described as a deductible tax because producers are not usually required to pay the government the full amount of the tax they invoice to their customers, as they are permitted to deduct the amount of tax they have been invoiced on their own purchases of goods or services intended for intermediate consumption or fixed capital formation (i.e., only the net amount of VAT is recorded after deducting refunds—see paragraph 5.27). VAT is usually calculated on the price of the good or service, including any other tax on the product. VAT may also be payable on imports of goods or services in addition to any import duties or other taxes on the imports.

Sales taxes (11412)

5.59 Sales taxes (11412) are all general taxes levied on sales at one stage only, whether at manufacturing or production stages or on wholesale or retail trade.

Turnover and other general taxes on goods and services (11413)

5.60 Turnover and other general taxes on goods and services (11413) are multistage cumulative taxes and taxes where elements of consumption taxes are combined with multistage taxes. These taxes are levied each time a transaction takes place without deduction for taxes paid on inputs. Multistage taxes can be combined with elements of value-added or sales taxes.

Taxes on financial and capital transactions (11414)22

5.61 Taxes on financial and capital transactions (11414) are taxes levied on the change in ownership of property, except those classified as gifts, inheritance, or estate transactions. These taxes are recorded as taxes on the services of the unit selling the asset. Included are taxes on the purchase and sale of nonfinancial or financial assets (including foreign exchange or securities), taxes on checks and other forms of payment, and taxes levied on specific legal transactions, such as the validation of contracts and the sale of immovable property. This category does not include taxes on the use of goods (part of 1145); taxes on capital gains (part of 111); recurrent taxes on net wealth (1132); capital levies (1135); fees paid to cover court charges or for birth, marriage, or death certificates that are included in administrative fees (1422); sales taxes (11412); or general stamp taxes (part of 116).

Excises (1142)

5.62 Excises (1142) are taxes levied as a product-specific unit tax on a predefined limited range of goods. Excises are usually levied at differentiated rates on nonessential or luxury goods, alcoholic beverages, tobacco, and energy. Excises may be imposed at any stage of production or distribution and are usually assessed as a specific charge per unit based on characteristics by reference to the value, weight, strength, or quantity of the product. Included are special taxes on individual products such as sugar, sugar beets, matches, and chocolates; taxes levied at varying rates on a certain range of goods; and taxes levied on tobacco goods, alcoholic drinks, motor fuels, and hydrocarbon oils. If a tax collected principally on imported goods also applies, or would apply, under the same law to comparable domestically produced goods, then the revenue from this tax is classified as arising from excises rather than from import duties. This principle applies even if there is no comparable domestic production or no possibility of such production. Taxes on the use of utilities such as water, electricity, gas, and energy are regarded as excises rather than taxes on specific services (1144). Excises exclude those taxes that are levied as general taxes on goods and services (1141); profits of fiscal monopolies (1143); customs and other import duties (1151); or taxes on exports (1152).

Profits of fiscal monopolies (1143)

5.63 Profits of fiscal monopolies (1143) cover that part of the profits of fiscal monopolies that is transferred to the government. Fiscal monopolies are public corporations, public quasi-corporations, or government-owned unincorporated enterprises that have been granted a legal monopoly over the production or distribution of a particular kind of good or service in order to raise revenue and not in order to further the interests of public economic or social policy. Such monopolies are typically engaged in the production of goods or services that may be heavily taxed in other countries—for example, alcoholic beverages, tobacco, matches, petroleum products, salt, playing cards, lotteries, gambling, etc. The exercise of monopoly powers is simply an alternative way for the government to raise revenue instead of the more overt procedure of taxing the private production of such products. In such cases the sales prices of the monopolies are deemed to include implicit taxes on the products sold.

5.64 In principle, only the excess of the monopoly profits over some notional “normal” profits should be recorded as taxes, while the “normal” profits are regarded as dividends (1412) or withdrawals of income from quasi-corporations (1413). However, it is recognized that it may be difficult to estimate this amount, and, in practice, the value of the taxes should be taken as equal to the amount of the profits actually payable from fiscal monopolies to government. Any reserves retained by fiscal monopolies are excluded. This tax is recorded when the payment takes place rather than when the profits were earned.

5.65 When a public enterprise is granted monopoly powers as a matter of deliberate economic or social policy because of the special nature of the good or service or the technology of production (e.g., public utilities, post offices and telecommunications, railways), it should not be treated as a fiscal monopoly. Property income payable to government from such public enterprises is recorded as dividends (1412) or withdrawals of income from quasi-corporations (1413). Export and import monopoly profits receivable from marketing boards or other enterprises dealing with international trade are similar to fiscal monopoly profits, but are classified as profits of export or import monopolies (1153).

5.66 The treatment of lotteries and other gambling activities deserves special mention. The concept of fiscal monopoly applies to state lotteries and other gambling to the extent that they are devices to raise revenue rather than further the interests of public economic or social policy, even though they may compete with other privately organized lotteries and other gambling. As is the case with other fiscal monopolies (see paragraph 5.64), in principle, the “normal” profits should be regarded as dividends (1412) or withdrawals of income from quasi-corporations (1413), while the excess should be recorded as a tax classified as profits on fiscal monopolies (1143). However, in practice it may be difficult to estimate the “normal” profits, and the taxes should be taken as equal to the amount of profits actually payable to government.

5.67 Governments that have monopoly powers over lotteries and other gambling activities often delegate the organization of these activities to nonprofit institutions serving households, with a view to a final distribution of the profits earned, through social transfers. This delegation of functions normally requires the nonprofit institution to organize those activities through a specialized department. When such departments have the attributes of an institutional unit (as described in paragraph 2.22), they may be classified as public corporations (see paragraph 2.104) that constitute a fiscal monopoly.

5.68 Depending on the administrative arrangements, the distribution of the profits earned may be done in two ways: (i) the fiscal monopoly transfers its profits to a government unit (classified as a tax in profits of fiscal monopolies (1143)), and the government unit then transfers the profits to the population; or (ii) the fiscal monopoly transfers the profits directly to the population (normally through criteria determined by law). In the latter case, a rerouting treatment is required because the government does not appear as a party to the transaction in the actual accounting records. Rerouting means the transaction is recorded as if the monopoly transferred its profits to government as described in (i) (see paragraph 3.28).

Taxes on specific services (1144)

5.69 Taxes on specific services (1144) are levied on payments for specific services. These taxes are levied on services such as transportation (including airport and other passenger taxes),23 insurance, banking, entertainment, restaurants, and advertising. Also included in this item are taxes levied on gambling and betting stakes for horse races, football pools, lotteries, and so forth. Taxes on entry to casinos, races, etc. are also classified as taxes on specific services.

5.70 This category also includes the implicit taxes resulting from the central bank imposing a rate of interest other than the market rates. The central bank’s main responsibility is to formulate and carry out monetary policy as part of economic policy. It therefore often acts differently than other financial corporations and generally has received the authority from government to impose its policies. In cases where the central bank uses its special powers to set interest rates that are out of line with market rates, the difference gives rise to an implicit tax and subsidy (see paragraph 6.89 and Box 6.2 for an illustration of recording these implicit taxes and subsidies). This procedure is analogous to and consistent with the practice of treating the difference between the market exchange rate and an alternative exchange rate imposed by the central bank as an implicit tax or subsidy (see paragraph 5.89).

5.71 This category does not include:

  • Taxes that are included in general taxes on goods and services (1141)

  • Taxes on individual gains from football pools or other gambling proceeds, classified in taxes on income, profits, and capital gains (111)

  • Profits transferred to government from state lotteries and other gambling enterprises regarded as profits of fiscal monopolies (1143), dividends (1412), or withdrawals of income from quasi-corporations (1413)

  • Taxes on checks and on the issue, transfer, or redemption of securities, classified as taxes on financial and capital transactions (11414)

  • Stamp tax revenues that cannot be assigned to taxes on services or other transactions, classified as other taxes (116)

  • Taxes on the use of utilities, such as water, electricity, gas, and energy, which are included under excises (1142).

Taxes on use of goods and on permission to use goods or perform activities (1145)

5.72 Taxes on use of goods and on permission to use goods or perform activities (1145) are fees levied for the issuance of a license or permit that are not commensurate with the cost of the control function of government. There are cases where the government provides something to the individual unit directly in return for a payment in the form of the granting of a permit or authorization. In such instances, the payment is part of a mandatory process that ensures proper recognition of ownership or ensures that activities are performed under the authorization of the law. The boundary between when such payments are to be recorded as a tax and when they are to be recorded as the sale of a service or as the sale of an asset by the government requires additional guidance.

Boundary with administrative fees

5.73 One of the regulatory functions of governments is to prohibit the ownership or use of certain goods or the pursuit of certain activities, unless specific permission is granted by issuing a license or other certificate for which a fee is demanded. To decide whether such a fee constitutes this tax category or administrative fees (1422), the following recommendations apply:

  • The payment is recorded as a tax when a license or a permit is automatically granted by the government as a mandatory condition to perform an activity or acquire an asset. The government unit performs little or no work other than a minimum control of the legal capacity of the acquirer to receive the permit (e.g., to confirm the applicant has not been convicted of a crime). The payment of the fee in such a case is not commensurate with the control function that the government exercises.

  • The payment is recorded as the sale of a service when, for instance, issuing the license or permit involves a proper regulatory function of the government by exercising control on the activity, checking the competence or qualifications of the persons concerned, etc. In such a case, the payment is taken to be proportional to the costs of producing the service for all or any of the entities benefiting from the services and is borne by those benefiting. The payment is recorded as a tax only if it is out of proportion to the costs of producing the services.

5.74 More specifically, the following types of fees are considered taxes:

  • Fees where the payer of the levy is not the receiver of the benefit, such as a fee collected from slaughterhouses to finance a service provided to farmers

  • Fees where government is not providing a specific service commensurate with the levy even though a license may be issued to the payer, such as a hunting, fishing, or shooting license that is not accompanied by the right to use specific government-owned natural resources

  • Fees where benefits are received only by those paying the fee but the benefits received by each individual are not necessarily in proportion to the payments, such as a milk marketing levy paid by dairy farmers and used to promote the consumption of milk

  • Fees paid to government for deposit insurance and other guarantee schemes if they are compulsory—that is, if beneficiaries cannot opt out of the scheme, if the payment is clearly out of proportion to the service provided, if the payment is not set aside in a fund, or if it can be used for other purposes.24

5.75 Although taxes in this category are levied on the use of goods rather than on the ownership or transactions in goods, registration of the ownership of goods may generate the tax claim. For example, registration of the ownership of animals or motor vehicles may be the event that causes a tax on the use of these items to be assessed. Taxes on the use of goods may apply even to functionally unusable goods, such as antique motor vehicles or guns.

Boundary with taxes on business activities levied on different bases

5.76 Boundary cases arise with taxes on business activities, which are levied on a combined income, payroll, or turnover base. If it is possible to estimate receipts related to each base, then the total should be allocated among the bases. If separate amounts cannot be estimated, but it is known that most of the receipts are derived from one base, then the whole of the receipts are classified according to that base.

Boundaries with other tax categories

5.77 Boundary cases arise with taxes on the ownership or use of property that could be classified as recurrent taxes on immovable property (1131), recurrent taxes on net wealth (1132), or other recurrent taxes on property (1136). Unlike the taxes under this item (category 1145), category 1131 is confined to taxes on the ownership or tenancy of immovable property and such taxes are usually a percentage of the assessed property value. The taxes included in categories 1132 and 1136 are confined to ownership rather than use of assets, apply to groups of assets rather than particular goods, and are based on the value of assets.

Boundary with the acquisition or use of an asset

5.78 Boundary cases arise with the payments for licenses to make use of a natural resource. If the natural resource qualifies as an asset and the government controls it on behalf of the community, payments for the license could be recorded as the disposal of the asset when government surrenders economic control of the asset and the life span of the license and the life span of the asset are the same. If the license agreement is recorded as the sale of an asset in its own right, it should be recorded as the disposal of an asset in the category of contracts, leases, and licenses (31441). A license for the use of the natural resource itself for a finite period does not reflect a disposal of an asset and should be classified as rent (see paragraph 5.124). Licenses to permit the use of natural resources not under the control of government will be treated as a tax (classified under this item) in all other cases except if the license is legally and practically transferable to a third party, in which case it should be classified as an asset in the category of contracts, leases, and licenses (see paragraphs A4.54–A4.55).

5.79Taxes on use of goods and on permission to use goods or perform activities (1145) are subdivided into motor vehicle taxes (11451) and other taxes on the use of goods and on the permission to use goods or perform activities (11452), while several subcategories of taxes are identifiable in the latter (see Table 5.4).

Table 5.4Detailed Classification of Taxes on Use of Goods and on Permission to Use Goods or Perform Activities (1145)
1145Taxes on use of goods and on permission to use goods or perform activities
11451Motor vehicle taxes1
11452Other taxes on use of goods and on permission to use goods or perform activities1
114521Business and professional licenses1
114522Pollution taxes1
114523Radio and television licenses1
114524Licenses and permits for households1
114525Other taxes on the use of goods and on permission to use goods or perform activities not elsewhere classified1

Further breakdown/“of which” lines could allow for the identification of specific goods or activities, and how these taxes relate to specific natural resources or environmental taxes.

Further breakdown/“of which” lines could allow for the identification of specific goods or activities, and how these taxes relate to specific natural resources or environmental taxes.

5.80 Motor vehicle taxes (11451) include taxes on the use of motor vehicles or permission to use motor vehicles. It does not include taxes on motor vehicles as property or net wealth or tolls for use of roads, bridges, and tunnels.

5.81 Other taxes on use of goods and on permission to use goods or perform activities (11452) include business and professional licenses that consist of taxes paid by enterprises in order to obtain a license to carry on a particular kind of business or profession and taxes payable by individuals to perform certain activities. Included in this tax category are the following:

  • General business taxes or licenses levied in a fixed amount, on a schedule according to the kind of business, or on the basis of various indicators such as floor space, installed horsepower, capital, or shipping tonnage would be included. It would not cover business taxes levied on gross sales, which would be classified under general taxes on goods and services (1141).

  • Taxes or licenses for particular kinds of businesses including permission to sell goods or provide services may be levied at regular intervals, on a one-time basis, or each time goods are used. Business licenses payable by enterprises are included, such as for taxi, casino, mining, exploitation of land and subsoil assets, or broadcasting. This category also includes all cases where government issues licenses to limit the number of units operating in a particular field where the limit is fixed arbitrarily and is not dependent on qualifying criteria. When government restricts the number of cars entitled to operate as taxis or limits the number of casinos permitted by issuing licenses, they are in effect creating monopoly profits for the approved operators and recovering some of the profits as the fee. These license fees should also be recorded as taxes in this category. In principle, if the license is valid for several years, the payment should be recorded on an accrual basis with an entry in other accounts payable (3308) for the amount of the prepayment of license fees covering future years. However, if government does not recognize a liability to repay the licensee in the case of a cancellation, the whole of the fee payable is recorded as a single tax payment at the time it is paid.

  • Taxes on pollution levied on the emission or discharge into the environment of noxious gases, liquids, or other harmful substances are included. On an accrual basis, the revenue receivable for emission permits, issued by governments under cap and trade schemes, should be recorded in this category at the time the emissions occur. No revenue should be recorded for permits that government issues free of charge. The timing difference between the cash received by government for the permits and the time the emission occurs constitutes a prepaid tax and gives rise to a financial liability (other accounts payable) for government. The difference between the prepaid tax value of the permit and the market value of the permit represents a marketable contract (nonproduced nonfinancial asset) for the holder (see paragraphs A4.48–A4.49). Amounts payable to government for the collection and disposal of waste or noxious substances are excluded from this tax category as they constitute a sale of services, recorded as sales of goods and services (142).

  • Taxes in this category other than business and professional licenses include taxes payable by persons or households for licenses for recreational hunting, shooting, or fishing, and taxes on the ownership of pets when the amount payable is not commensurate with the administrative cost. They also include radio and television licenses payable by viewers, unless the public authorities provide general broadcasting services, in which case a service payment, rather than a tax, is recorded.

Other taxes on goods and services (1146)

5.82 Other taxes on goods and services (1146) include taxes on the extraction of minerals, fossil fuels, and other exhaustible resources from deposits owned privately or by another government and any other taxes on goods or services not included in categories 1141 through 1145. Taxes on the extraction of exhaustible resources usually are a fixed amount per unit of quantity or weight, but can be a percentage of value. The taxes are recorded when the resources are extracted. Payments for timber felling and the extraction of exhaustible natural resources from deposits owned by the government unit receiving the payment are classified as rent (1415) (see paragraph 5.129).

Taxes on international trade and transactions (115)

5.83 Taxes on international trade and transactions (115) are taxes that become payable when goods cross the national or customs frontiers of the economic territory, or when transactions in services exchange between residents and nonresidents. These taxes are classified into various subcategories according to the nature of the exchange and whether the exchange is related to imports or exports (see Table 5.5).

Table 5.5Detailed Classification of Taxes on International Trade and Transactions (115)
115Taxes on international trade and transactions1
1151Customs and other import duties
1152Taxes on exports
1153Profits of export or import monopolies
1154Exchange profits
1155Exchange taxes
1156Other taxes on international trade and transactions

Further breakdown/“of which” lines could allow for the identification of specific goods or activities, and how these taxes relate to specific natural resources or environmental taxes.

Further breakdown/“of which” lines could allow for the identification of specific goods or activities, and how these taxes relate to specific natural resources or environmental taxes.

5.84 Customs and other import duties (1151) cover revenue from all levies and duties payable on goods of a particular kind because they are entering the country or services because they are delivered by nonresidents to residents. The levies may be imposed with the intention to raise revenue or discourage imports in order to protect resident producers of the same goods or services. The duties may be determined on a specific or ad valorem basis, but they must be restricted by law to imported products. Included are duties levied under the customs tariff schedule and its annexes, including surtaxes that are based on the tariff schedule, consular fees, tonnage charges, statistical taxes, fiscal duties, and surtaxes not based on the customs tariff schedule. This category covers taxes that fall on imports only. Imports that fall into a wider category of goods that are subject to the tax should be recorded under general taxes on goods and services (1141) or excises (1142). If excises are levied on imported goods under the same law to comparable domestically produced goods, then the revenue from the tax should be classified as arising from excises rather than from import duties (see paragraph 5.62).

5.85Taxes on exports (1152) include all levies that become payable on goods that are transported out of the country, or services that are provided to nonresidents by residents. Rebates on exported goods that are repayments of previously paid general consumption taxes, excises, or import duties are deducted from the gross amounts receivable from the respective taxes, not from amounts receivable in this category.

5.86Profits of export or import monopolies (1153) include the profits from government-established enterprises with the domestic monopoly right to export or import particular goods and/or control services provided to or received from nonresidents. The exercise of the monopoly powers is an alternative way of raising revenue through taxes on exports, imports, or dealings in foreign exchange. When such export or import monopolies exist, the profits remitted to government by the monopolistic enterprises or marketing boards are considered to be taxes, classified as profits of export or import monopolies (1153). While in principle only the excess of the monopoly profits over some notional “normal” profits should be treated as taxes, it is difficult to estimate this amount, and in practice the value of the taxes should be taken as equal to the amount of the profits actually payable from the export or import monopolies to government. This tax is recorded when the payment to the government takes place rather than when the profits were earned and does not include the retained reserves of the enterprises or marketing boards.25

5.87 Property income receivable from export or import enterprises or marketing boards that do not represent monopoly profits should be recorded as dividends (1412) or withdrawals of income from quasi-corporations (1413). Fiscal monopoly profits receivable from public enterprises or marketing boards dealing in commodities domestically, outside of international trade, should be recorded under profits of fiscal monopolies (1143).

5.88Exchange profits (1154) include the profits generated when the monopoly powers of government or monetary authorities are exercised to extract a margin between the purchase and sale prices of foreign exchange, other than to cover administrative costs. The revenue derived constitutes a compulsory levy extracted from both purchaser and seller of foreign exchange. Similarly, an implicit tax results from the operation of a multiple exchange rate regime by the central bank or other official agency. It is the common equivalent of an import duty and export duty levied in a single exchange rate system or of a tax on the sale or purchase of foreign exchange. As in the case of the profits of export or import monopolies, the revenue represents the exercise of monopoly powers for tax purposes and is included in tax revenue when received by government.

5.89 Under a multiple exchange rate regime, two or more exchange rates are applicable to different categories of transactions; the rates favor some categories and discourage others. The net proceeds as a result of these transactions are calculated as implicit taxes or subsidies (see paragraph 6.89). The amount of the implicit tax or subsidy for each transaction can be calculated as the difference between the value of the transaction in domestic currency at the actual exchange rate applicable and the value of the transaction at a unitary rate that is calculated as a weighted average of all official rates used for external transactions.

5.90 Exchange profits are often included in a lump-sum payment from the monetary authorities to government. Such a lump-sum payment should be disaggregated according to the economic nature of the components, and each component classified according to its nature. These lump-sum payments may include components of dividends, exchange profits, interest, and/or equity withdrawals. This category for exchange profits should not include any payments to government of exchange profits realized other than as a result of maintenance of an exchange rate differential. Also excluded from this category are any payments to government of unrealized revaluation profits, which are in the nature of a book entry resulting from revaluation of foreign exchange or gold holdings for the owner. As discussed in paragraph 5.115, such payments to government based on holding gains are classified as a withdrawal of equity rather than a tax. Any operational profits transferred to government should be classified as dividends (1412) (see paragraph 5.111).

5.91Exchange taxes (1155) cover taxes that are levied upon the sale or purchase of foreign exchange, whether at a unified exchange rate or at different exchange rates. Included are taxes on remittances abroad if the taxes are levied on the purchase of foreign exchange that is to be remitted. Remittance taxes that are not levied on the purchase of foreign exchange should be recorded under other taxes on international trade and transactions (1156).

5.92Other taxes on international trade and transactions (1156) include other taxes levied on various aspects of international trade and transactions, except those payable by producers. This item includes taxes levied exclusively on international travel, taxes on insurance or investment abroad, and taxes on foreign remittances, excluding taxes levied on the purchase of foreign exchange to be remitted abroad, which are included in exchange taxes (1155).

Other taxes (116)

5.93 Other taxes (116) cover revenue from taxes levied predominantly on a base or bases not elsewhere classified, and unidentified taxes. The item is subdivided into other taxes payable solely by business (1161) and other taxes payable by other than business or unidentifiable (1162). The item includes taxes on persons that are not based on income or presumed income, sometimes referred to as poll taxes, head taxes, or capitation taxes. Personal taxes based on actual or presumed income should be recorded as taxes on income, profits, and capital gains (111). Also included are stamp taxes that do not fall exclusively or predominantly on a single class of transactions or activities covered by taxes on financial and capital transactions (11414). Examples would be revenues from the sale of stamps required to be affixed to contracts. Revenues from the sale of stamps assignable to a single category, such as liquor and cigarettes, would be shown as taxes on those products, either excises (1142) or taxes on specific services (1144). Similarly, stamp duties on financial transactions would be shown as taxes on financial and capital transactions (11414). Also included in other taxes (116) would be an expenditure tax that is levied on purchases but is personalized by the application of personal deductions and exemptions. Revenue from taxes levied on a combination of several tax bases, or on multiple tax bases, where the revenue cannot be readily allocated to each tax base or to one predominant tax base is also reported in this category of taxes.

Social Contributions [GFS] (12)

5.94 Social contributions[GFS] (12) are actual or imputed revenue receivable by social insurance schemes to make provision for social insurance benefits payable. Social contributions [GFS] (12) exclude contributions receivable under employment-related pension and other retirement schemes that create a liability for future benefits payable. Social contributions are further classified according to the nature of the payee and the nature of the scheme that received these contributions (see Table 5.6). These receipts are from employers on behalf of their employees, from employees, or from self-employed or unemployed persons on their own behalf to secure entitlement to social benefits, payable in cash and in kind, to the contributors, their dependents, or their survivors.26 The contributions are usually compulsory, but may also be voluntary. Voluntary contributions are usually made in arrangements where a means test determines whether contributors are exempted from compulsory contributions, but are eligible to participate by choice. If any contributions are voluntary, a memorandum item of their total amount would be useful for computing the fiscal burden and other analytical uses. Social contributions are classified as social security contributions (121) or other social contributions (122) depending on the type of scheme receiving them.

Table 5.6Detailed Classification of Social Contributions [GFS] (12)
12Social contributions [GFS]1
121Social security contributions [GFS]
1211Employee contributions [GFS]
1212Employer contributions [GFS]
1213Self-employed or unemployed
contributions [GFS]
1214Unallocable contributions [GFS]
122Other social contributions [GFS]
1221Employee contributions [GFS]
1222Employer contributions [GFS]
1223Imputed contributions [GFS]

Further breakdown/“of which” lines could allow for the identification of the contributions in cash and in kind, and make a distinction between compulsory and voluntary contributions.

Further breakdown/“of which” lines could allow for the identification of the contributions in cash and in kind, and make a distinction between compulsory and voluntary contributions.

5.95 The coverage of social contributions in GFS is more restricted than in the 2008 SNA. In GFS, only amounts that constitute revenue are included in social contributions [GFS] (12)—that is, those transactions that create a recognized liability are not part of revenue. In GFS, social contributions exclude contributions to autonomous and nonautonomous pension funds and to unfunded employment-related schemes that provide pension and other retirement benefits. These transactions should be recorded in GFS as incurrence of liabilities for future pension and other retirement benefits payable. The 2008 SNA records them both as social contributions and incurrence of liabilities, with the double recording being neutralized by recording an adjustment in the use of income account for the change in pension entitlements.27

The boundary between social contributions and other categories of taxes

5.96 Compulsory transfers can be classified as either a tax or a social contribution. Social contributions include payments made by insured persons, or their employers, to secure entitlement to social benefits. The contributions are levied as a function of earnings, payroll, or the number of employees. When income is used as a proxy for gross wages, as for the self-employed, the receipts are included as social contributions. Compulsory payments levied as a tax assessed on a different base and earmarked for funding social protection schemes are classified in the respective tax category and not as social contributions. In particular, receipts based on net income personalized by adjustments for personal deductions and exemptions are classified as taxes on income, profits, and capital gains (111), even if earmarked for the payment of social benefits. Compulsory payments levied on enterprises as a function of earnings, payroll, or the number of employees that do not make provision for entitlement to social security benefits are classified as taxes on payroll or workforce (112). Similarly, compulsory levies on the use of fuel are classified as excises (1142), even though some of it could be earmarked to finance social benefits to victims of motor vehicle accidents. In these cases, if the government unit that levies the tax and the unit providing the social benefits are not the same, a subsequent grant should be recorded to the unit providing the social benefit.

Social security contributions [GFS] (121)

5.97 Social security contributions[GFS] (121) are actual revenue receivable by social security schemes organized and operated by government units, for the benefit of the contributors to the scheme. These contributions are classified by the source of the contribution, which may be the employers or the household sector (separated according to whether they are employees, self-employed, or unemployed). Employee contributions (1211) are either payable directly by employees or deducted from employees’ wages and salaries and transferred on their behalf by the employer. Employer contributions (1212) are payable directly by employers on behalf of their employees. Self-employed or unemployed contributions (1213) are paid by contributors who are not employees. Unallocable contributions (1214) are those contributions whose source cannot be determined. Amounts payable by general government employers are not eliminated by consolidation when the paying and receiving units are in the same sector or subsector because the contributions are considered to be rerouted as described in paragraph 3.28.

Other social contributions [GFS] (122)

5.98 Other social contributions[GFS] (122) are actual and imputed contributions receivable by social insurance schemes operated by employers on behalf of their employees. Unlike social security schemes, social insurance schemes for employees generally tie the level of benefits directly to the level of contributions. Such schemes usually are operated by general government units for their own employees, but they can be operated by one unit on behalf of the employees of many government units or even public corporations. These contributions can be receivable from employees or from employers.

5.99Employee contributions (1221) include amounts payable directly by employees or deducted from wages and salaries and transferred by employers on behalf of employees. Employer contributions (1222) include amounts payable by employers on behalf of their employees. As with employer contributions to social security schemes, these contributions are not eliminated by consolidation when the paying and receiving governments are in the same sector or subsector.

5.100Imputed contributions (1223) are revenue that arises when government employers provide non-pension benefits directly to their employees, former employees, or dependents out of their own resources without involving an insurance enterprise and without creating a special fund or segregated reserve for the purpose.28 As described in detail in paragraphs A2.64–2.66, in this situation, existing employees may be considered as being protected against various specified needs or circumstances, even though no reserves are built up to provide for future entitlement. Compensation of employees (2122) is therefore imputed (see paragraph 6.22) equal to the amount of social contributions that would be needed to secure the de facto entitlements to the social benefits they accumulate. A simultaneous transaction is recorded between the household sector and government, for the household imputed contributions (1223) receivable.

Grants (13)

5.101 Grants (13) are transfers receivable by government units, from other resident or nonresident government units or international organizations, that do not meet the definition of a tax, subsidy, or social contribution. As indicated in paragraph 3.10, a transfer is a transaction in which one institutional unit provides a good, service, or asset to another unit without receiving from the latter any good, service, or asset in return as a direct counterpart. Grants are normally receivable in cash, but may also take the form of the receipt of goods or services (in kind). Grants receivable are classified first by the type of unit providing the grant and then by whether the grant is current or capital.

5.102 Three sources of grants are recognized in GFS: grants from foreign governments (131), grants from international organizations (132), and grants from other general government units (133). For the general government sector, these transactions should be eliminated in consolidation. Therefore, grants from other general government units (133) will have a nonzero value only when statistics are compiled for a subsector of the general government sector. To allow for consolidation, it may be useful to identify grants receivable from other general government units also according to the subsector of the counterparty (see Table 5.7).

Table 5.7Detailed Classification of Grants (13)
13Grants
131From foreign governments
1311Current
1312Capital
132From international organizations
1321Current
1322Capital
133From other general government units1
1331Current
1332Capital

Further breakdown/“of which” lines could allow for the identification of subsectors and individual units (see Table 3.1).

Further breakdown/“of which” lines could allow for the identification of subsectors and individual units (see Table 3.1).

5.103 Current grants (1311/1321/1331) are current transfers receivable by government units, from other resident or nonresident government units or international organizations, that do not meet the definition of a tax, subsidy, or a social contribution. Current grants are those transfers (see paragraph 3.17) receivable that are not capital transfers. Capital grants (1312/1322/1332) are capital transfers receivable by government units, from other resident or nonresident government units or international organizations, that do not meet the definition of a tax, subsidy, or a social contribution (see paragraph 3.16). If doubt exists regarding the character of a grant, it should be classified consistently by both parties (see paragraph 3.18).

5.104 A grant in kind concerns a good or service provided free of charge or the change of ownership of an existing nonfinancial asset in the accounts of the donor without receiving anything of commensurate value in return. Goods and services that are consumed, such as food contributions, blankets, and medical and rescue services and supplies, are classified as current grants. Aid of a capital nature receivable from resident and nonresident general governments and international organizations is classified as capital grants. Grants in kind should be valued at current market prices. If market prices are not available, then the value should be the explicit costs incurred in providing the resources or the amounts that would be received if the resources were sold. A capital grant in kind necessarily concerns the change of ownership of a product previously recorded as a nonfinancial asset in the accounts of the donor government. In this case, there is no effect in the net lending/net borrowing, because the counterpart entry for the positive effect in the net worth (the transfer of wealth implied by the grant revenue) is a transaction in nonfinancial assets (the acquisition of the asset being transferred by the donor). In some cases, the donor and the recipient may view the value of the nonfinancial asset quite differently. To maintain consistency in the macroeconomic statistical system, the valuation from the viewpoint of the donor should be used for recording transactions. If the market value of the asset in the balance sheet of the recipient of the asset is different, the recipient would then record a subsequent holding gain or loss on this asset (see paragraph 10.5).

5.105 When using the accrual basis for recording, the time at which a grant is recorded is dependent on whether the recipient has a claim on the donor. In many cases, the grant recipient never has a claim on the donor and the grant should be attributed to the time at which the cash payment is made or the goods or services are delivered by the donor. When a claim is involved, grants are recorded when all requirements and conditions for receiving them are satisfied and the receiving unit has an unconditional claim recorded under other accounts receivable (3208). In some cases, a potential grant recipient has a legal claim when it has satisfied certain conditions, such as the prior incurrence of expenses for a specific purpose or when a certain event has occurred, such as the passage of legislation. Determining this time can be complex because there could be a wide variety of eligibility conditions that have varying legal powers, and so grants are most commonly recorded when received. When using the cash basis of recording, grants are recorded when cash is received. Grants in kind will not be recorded in a cash system.

Other Revenue (14)

5.106 Other revenue (14) is all revenue receivable excluding taxes, social contributions, and grants. This category of revenue includes property income, sales of goods and services, and miscellaneous other types of revenue.

Property income [GFS] (141)

5.107Property income [GFS] (141) is the revenue receivable in return for putting financial assets and natural resources at the disposal of another unit.29 Revenue in this category may take the form of interest, distributed income of corporations, investment income, and rent. Distributed income of corporations includes dividends, withdrawals of income from quasi-corporations, and reinvested earnings on foreign direct investment. Investment income includes property income from investment income disbursements, and holders of investment fund shares.

Interest [GFS] (1411)

5.108 Interest[GFS] (1411) is a form of investment income that is receivable by the owners of certain kinds of financial assets (SDRs, deposits, debt securities, loans, and other accounts receivable) for putting these financial assets and other resources at the disposal of another institutional unit.30 The financial assets giving rise to interest are all claims of creditors over debtors. Under the accrual basis of recording, the amount of outstanding debt increases as interest accrues continuously over the period that the financial asset exists, and the amount due to the creditor declines as the payments are made on the debt by the debtor. The amount that the debtor owes to the creditor is referred to as the principal amount. Interest revenue also includes imputed interest that originates from interest forgone by employers when they provide loans to employees at reduced or even zero rates of interest as part of the remuneration in kind of government and public sector employees (see paragraph 6.17).

5.109 Interest may be a predetermined sum of money or a fixed or variable percentage of the principal outstanding. If some or all of the interest accruing to the creditor is not paid during the period in question, it should be added to the amount of the principal outstanding. However, the interest may not necessarily be due for payment until a later date and sometimes not until the loan or other financial instrument matures. To the extent that interest has accrued without being paid, the debtor’s total liability to the creditor has increased. On an accrual basis, any periodic or other payments reduce the total liability but are not revenue transactions.

5.110 Many considerations must be taken into account when determining the amount of interest revenue to record, or to eliminate, in consolidation. To avoid repetition, interest is described in more detail in paragraphs 6.62–6.83. Interest should also be recorded according to the subsector of the counterparty, to allow for consolidation of the general government and public sectors (see Table 5.8).

Table 5.8Detailed Classification of Interest [GFS] (1411)
1411Interest [GFS]
Interest [SNA]
Minus: FISIM
14111From nonresidents
14112From residents other than general government1
14113From other general government units1

Further breakdown/“of which” lines could allow for the identification of subsectors and individual units (see Table 3.1).

Further breakdown/“of which” lines could allow for the identification of subsectors and individual units (see Table 3.1).

Dividends (1412)

5.111 Dividends (1412) are the distributed earnings allocated to government or public sector units, as the owners of equity, for placing funds at the disposal of corporations.31 Raising equity through the issue of shares is an alternative way of raising funds compared to borrowing. Equity does not give rise to a liability that is fixed in monetary terms and it does not entitle the holders to a fixed or predetermined income. Instead, the board of directors or other managers of the corporation must declare a dividend payable on their own volition. Dividends exclude issues of bonus shares that simply represent a reclassification between own funds, reserves, and undistributed profits.

5.112 Although dividends represent a part of income that has been generated over a substantial period of time, often 6 or 12 months, dividends are not recorded in GFS at the time the economic value is generated. For public corporations where government or another public corporation is the only shareholder and the shares are not publicly traded, the dividends are recorded at the time they are payable. Quoted shares go “ex-dividend,” meaning that the dividend is payable to the owner at that date. In other words, the owner of the equity at the ex-dividend date, and not the owner on the date dividends became payable, has the right to the dividend. A share sold “ex-dividend” is therefore worth less than one sold without this constraint. In this case, the time of recording of dividends is the point at which the share price starts to be quoted on an “ex-dividend” basis rather than at a price that includes the dividend.

5.113 General government units may receive dividends from resident or nonresident private or public corporations (see Table 5.9). In exceptional cases, legally constituted corporations that are classified as a general government unit may also distribute dividends, so that dividends may also be receivable from other general government units (though subject to consolidation). The sector of the counterparty to dividends receivable should be identified separately to allow for consolidation of the general government and public sectors.

Table 5.9Detailed Classification of Dividends (1412)
1412Dividends
14121From nonresidents
14122From residents1

Further breakdown/“of which” lines could allow for the identification of subsectors and individual units (see Table 3.1).

Further breakdown/“of which” lines could allow for the identification of subsectors and individual units (see Table 3.1).

5.114 Distributions of profits by public corporations may take place irregularly and may not be explicitly labeled as dividends. Nevertheless, dividends include all distributions of profits by corporations to their shareholders or owners, by whatever name they are called, including profits of central banks transferred to government units, profits transferred or distributed from the operation of monetary authority functions outside the central bank, and profits transferred by state lotteries that compete with other privately organized lotteries. Distributions of profits of fiscal monopolies (1143) and profits of export or import monopolies (1153), however, are classified as taxes, as described in paragraphs 5.63 and 5.86.

5.115 Dividends are notionally paid out of the current period’s operating surplus. However, corporations often smooth the payments of dividends, sometimes paying out rather less than their operating surplus but sometimes paying out a little more, especially when the operating surplus itself is very volatile. For practical reasons, no attempt is made to align dividend payments with earnings except in one circumstance. The exception occurs when dividends are disproportionately large relative to the recent level of dividends and earnings. Such disproportionally large and irregular payments, often referred to as “super-dividends,” are often based on accumulated reserves, privatization receipts, other sales of assets, or holding gains. Any dividends declared greatly in excess of the recent level of dividends and earnings should be recorded as a transaction in financial assets, specifically the withdrawal of owners’ equity from the corporation (see paragraph 9.49).

5.116 To determine whether “super-dividends” are disproportionately large, it is helpful to introduce the concept of distributable income. Distributable income of a corporation is equal to entrepreneurial income, plus all current transfers receivable, minus all current transfers payable, and minus the adjustment for the change in pension entitlements relating to the pension scheme of that corporation (see also 2008 SNA 7.131). From this it is possible to look at the ratio of dividends to distributable income over the recent past and assess the plausibility that the current level of dividends declared is in line with past practice. In practice, a proxy for distributable income can be measured by the net operating balance (NOB), excluding dividends payable and net capital transfers. Determining whether dividends are in line with past practice is recommended for all corporations, including the central bank.

5.117 Interim dividends are dividend payments during a reporting period, before the final operating result of a corporation is known. If evidence exists that such dividends are not from the current period’s operating surplus, interim dividend payments should be recorded as a financial advance to the shareholder in transactions in financial assets and liabilities.

Withdrawals of income from quasi-corporations (1413)

5.118Withdrawals of income from quasi-corporations (1413) consist of that part of distributable income32 that the owner withdraws from the quasi-corporation. By definition, quasi-corporations33 cannot distribute income in the form of dividends, but the owner may choose to withdraw some or all of the distributable income. Conceptually, the withdrawal of such income is equivalent to the distribution of corporate income through dividends and is recorded the same way. The amount of income that the owner of a quasi-corporation chooses to withdraw will depend largely on the size of its disposable income before taxes. All such withdrawals are recorded on the date the payment actually occurs.

5.119 As with dividends, withdrawals of income from quasi-corporations do not include withdrawals of funds realized from the sale or other disposal of the quasi-corporation’s assets. Withdrawals based on such sales should be recorded as disposals of nonfinancial assets in the accounts of the quasi-corporation and the reduction of the equity of quasi-corporations owned by government sector units. Similarly, funds withdrawn by liquidating large amounts of accumulated retained earnings or other reserves of the quasi-corporation are recorded as withdrawals from equity.

Property income from investment income disbursements (1414)

5.120 Property income from investment income disbursements (1414) includes property income attributed to insurance policyholders and holders of investment fund shares.34 Insurance enterprises hold technical reserves in the form of prepayments of premiums, reserves against outstanding claims, and actuarial reserves against outstanding risks with respect to life insurance policies. These reserves are liabilities toward the beneficiaries, including any government or other public sector units that are policyholders. Any income receivable from the investment of the corresponding assets should also be attributed as the property income of the policyholders or beneficiaries. However, for government sector units as the holder of policies, the revenue related to this item is likely to be unknown and would probably be calculated only in the context of the whole of the economy; therefore this revenue item is excluded from GFS and so is an adjustment item between GFS and national accounts (see Appendix 7). This type of property income is described in greater detail in paragraphs 6.113–6.119 in the context of the corresponding expense.

5.121 Investment income attributed to holders of shares or units in investment funds includes two separate items. The first of these is the dividends distributed to investment fund shareholders. The second is retained earnings attributed to investment fund shareholders. The increase in value of investment fund shares or units other than from holding gains and losses is recorded as distributed to the share- or unit holders and reinvested by them in the financial instrument.

Rent (1415)

5.122 Rent (1415) is the revenue receivable by the owners of a natural resource (the lessor or landlord) for putting the natural resource at the disposal of another institutional unit (a lessee or tenant) for use of the natural resource in production. Rent receivable is typically related to a resource lease on land, subsoil resources, and other natural resources. In terms of the agreement, the owner can extend or withhold permission for continued use of the asset from one year to the next. It constitutes an agreement whereby the legal owner of a natural resource that is considered to have an infinite life makes it available to a lessee in return for a regular payment recorded as property income and described as rent.35

5.123 On the accrual basis of recording, rent accrues continuously to the asset’s owner throughout the period of the contract. The rent recorded for a particular reporting period is, therefore, equal to the value of the accumulated rent that becomes payable over the reporting period and may differ from the amount of rent that becomes due for payment or is actually paid during the period.

5.124 Rent excludes payments receivable by the owners of natural resources if such payments permit the resource to be used to extinction—such activity is regarded as a sale (see paragraphs 8.54 and A4.19) and possibly depletion (see paragraph 10.52) of the non-produced asset. Also excluded from rent are amounts receivable by owners of natural resources when they allow the resource to be used for an extended period of time in such a way that, in effect, the user controls the use of the resource during this time with little, if any, intervention from the legal owner. This option leads to recording a transaction in an asset, classified as contracts, leases, and licenses (31441), for the user, distinct from the resource itself (see paragraphs 8.56 and A4.19).

5.125 Two types of resource rent are described ahead in detail: rent on land and rent on subsoil resources. Resource rent on other natural resources follows the pattern laid out by these two types. The boundary between resource rent and the rental of produced assets is discussed in paragraphs 5.131–5.132.

Rent on land

5.126 Rent on land is recorded as accruing continuously to the landowner throughout the period of the contract. Rent may be paid in cash or in kind. Under sharecropping or similar schemes, the value of the rent payable is not fixed in advance in monetary terms and is measured by the value at basic prices36 of the crops that the tenants are obliged to provide to the landowner government unit under the contract between them.

5.127 Rent on land also includes the rent payable to general government sector units for the use of inland waters and rivers (for the right to exploit such waters for recreational or other purposes, including fishing) or noncultivated land (for the right to cut timber on such land). In the case of permits that allow timber felling in a natural forest, it is common for these fellings to be allowed under strict limits with a fee payable per unit volume of timber felled (stump-age). The limits are usually such that the harvest of timber is sustainable and so these payments should also be recorded as rent (1415). However, if a unit is given permission to fell an area of natural forest, or to fell at its discretion without any restriction in perpetuity, the payments made to the owner constitute the sale of an asset. For those forests that are produced assets, the extraction of timber is treated as the sale of a product.

5.128 A landowner may be liable to pay land taxes or incur certain maintenance expenses solely as a consequence of owning the land. By convention, such taxes or expenses are recorded as payable by the tenant who is deemed to deduct them from the rent that he would otherwise be obliged to pay to the landowner. Rent reduced in this way by taxes or other expenses for which the landowner is liable is described as “after-tax rent.” The adoption of this convention reflects the true economic nature of the transactions involved in the accounts of both parties.

Rent on subsoil assets

5.129 The ownership of subsoil assets in the form of deposits of minerals or fossil fuels (coal, oil, or natural gas) depends upon the way in which property rights are defined by law and also on international agreements in the case of deposits below international waters. In some cases the assets may belong to the owner of the ground below which the deposits are located, but in other cases they may belong to a local or central government unit.

5.130 General government units may grant leases to other institutional units that permit them to extract these deposits over a specified period of time in return for a payment or series of payments. These payments are often described as “royalties,” but they are essentially rent that accrues to owners of natural resources in return for putting these assets at the disposal of other units for specified periods of time. The rent may take the form of periodic payments of fixed amounts, irrespective of the rate of extraction, or, more commonly, they may be a function of the quantity, volume, or value of the asset extracted. Enterprises engaged in exploration on government land may make payments to general government units in exchange for the right to undertake test drilling or otherwise investigate the existence and location of subsoil assets. Such payments are also recorded as rents even though no extraction may take place.

Boundary with rental of produced assets

5.131 Rent should not be confused with the rental of produced assets, which is recorded as sales of goods and services (142).37 Rentals are payments made under an operating lease to use a fixed asset belonging to a unit where the owner maintains and replaces as necessary, and makes available the fixed asset on demand to lessees. The difference in treatment arises because lessors of produced assets are engaged in a production process whereby they provide services to the lessees, such as maintaining inventories of fixed assets available for lease at short notice and repairing and maintaining the leased assets. In particular, the rentals payable by government units as tenants are recorded as payments for the provision of building or housing services. Rent is revenue receivable by owners of natural resources for placing these assets at the disposal of other units.

5.132 A single payment may cover both rent and rentals when an institutional unit rents land that consists of land improvements and land and buildings situated on the land in a single contract, or lease, in which the two kinds of payments are not differentiated from each other. If there is no objective basis on which to split the payment between rent on land and rental on the produced assets, it is recommended to treat the whole amount as rent when the value of the land is believed to exceed the value of the buildings and other produced assets, and as a rental otherwise.

Boundary with taxes

5.133 Rent should also not be confused with severance taxes, business licenses, or other taxes. Severance taxes are imposed on the extraction of minerals and fossil fuels from reserves owned privately or by another government. If the payment counts toward the taxes on profits, then it should be classified as taxes on income, profits, and capital gains (111). Payments related to the gross value of production should be classified as other taxes on goods and services (1146). Payments for a license or permit to conduct extraction operations should be classified as taxes on use of goods and on permission to use goods or perform activities (1145).

Reinvested earnings on foreign direct investment (1416)

5.134 Reinvested earnings are the direct investor’s share of the retained earnings of the direct investment38 enterprise. A general government unit or public corporation may have foreign direct investment in nonresident special purpose entities (SPEs), or nonresident branches or subsidiaries of public corporations. Actual distributions receivable from such nonresident units out of their distributable income should be recorded as dividends (1412) or withdrawals of income from quasi-corporations (1413). In addition, these entities may have retained some of their earnings. Retained earnings of a corporation or quasi-corporation are equal to the distributable income39 minus the dividends payable or withdrawal of income from the corporation or quasi-corporation, respectively.

5.135 Retained earnings of a foreign direct investment enterprise are to be recorded as if they were distributed to foreign direct investors in proportion to their ownership of the equity of the enterprise and then reinvested by them.40 The imputed remittance of these retained earnings should be recorded as reinvested earnings on foreign direct investment, while the counterpart entry for the imputed reinvestment should be recorded as the acquisitions of equity and investment fund shares (3205). The rationale behind this treatment is that, because a direct investment enterprise is, by definition, subject to control or influence by the direct investor or investors, the decision to retain some of its earnings within the enterprise represents an investment decision on the part of the investor(s) (see paragraph 6.120).41

Sales of goods and services (142)

5.136 Sales of goods and services (142) consist of the sales by market establishments, administrative fees charged for services, incidental sales by nonmarket establishments, and imputed sales of goods and services. Sales of goods and services are recorded as revenue without deduction of the expenses incurred in generating that revenue. Sales of goods and services are further classified according to whether they relate to market or nonmarket production (see Table 5.10). It is quite possible for general government sector units to sell their output at prices that are less than the cost of production (which is calculated as the sum of compensation of employees, use of goods and services, consumption of fixed capital, and taxes (minus subsidies) on production). Indeed, as nonmarket producers, most general government units distribute their output without charge, or for prices that are not economically significant. These prices defray some of the costs or may eliminate some of the excess demand that otherwise would exist. In contrast, corporations sell their output at prices that are economically significant.

Table 5.10Detailed Classification of Sales of Goods and Services (142)
142Sales of goods and services1
1421Sales by market establishments
1422Administrative fees
1423Incidental sales by nonmarket establishments
1424Imputed sales of goods and services

Detailed data about the sectors of the counterparty may not be available. Where such data are available, further breakdown/“of which” lines could identify the subsectors to allow consolidation. For analytical purposes, it may also be useful to separately identify the nature of the respective goods or services that were sold.

Detailed data about the sectors of the counterparty may not be available. Where such data are available, further breakdown/“of which” lines could identify the subsectors to allow consolidation. For analytical purposes, it may also be useful to separately identify the nature of the respective goods or services that were sold.

5.137 Sales by market establishments (1421) are the sales of an establishment that is a part of an enterprise (see paragraph 2.75) situated in a single location and at which only a single productive activity is carried out or the principal productive activity accounts for most of the value added. A market establishment within a government unit is an establishment that sells or otherwise disposes of all or most of its output at prices that are economically significant. This category consists of the sales of all market establishments that are part of the units for which statistics are being compiled. Because public corporations comprise primarily market establishments, their sales are included in this category when compiling statistics for the public sector, unless the sales are of a specific type that are to be recorded elsewhere, such as under insurance premiums and administrative fees. Rentals of produced assets are recorded as sales of services and are included in this category. Sales of nonfinancial assets other than inventories are disposals of nonfinancial assets (as described in Chapter 8) and are not sales of goods and services.

5.138 Administrative fees (1422) include fees for compulsory licenses and other administrative fees that are sales of services. Examples are drivers’ licenses, passports, visas, court fees, and radio and television licenses when public authorities provide general broadcasting services. Also included are fees payable for voluntary participation in deposit insurance or other guarantee schemes that do not qualify to be a standardized guarantee scheme. These fees are considered a sale of a service when, for instance, issuing the license or permit implies a proper regulatory function of the government. In this case, the payment is taken to be proportional to the cost of producing the service. For a detailed description on the boundary between taxes and the purchases of services, see paragraph 5.74. If a payment is clearly out of all proportion to such cost, then the fee is classified as taxes on use of goods and on permission to use goods or perform activities (1145).

5.139 Incidental sales by nonmarket establishments (1423) cover sales of goods and services by nonmarket establishments of general government units other than administrative fees. Included are sales incidental to the usual social or community activities of government departments and agencies, such as sales of products made at vocational schools, seeds from experimental farms, postcards and art reproductions by museums, fees at government hospitals and clinics, tuition fees at government schools, and admission fees to government museums, parks, and cultural and recreational facilities that are not public corporations.

5.140 Imputed sales of goods and services (1424) are recorded when a unit produces goods and services for the purpose of using them as compensation of employees in kind. The unit is acting in two capacities: as an employer and as a general producer of goods and services. In order to indicate the total amount paid as compensation of employees, it is necessary to treat the amount paid in kind as if it had been paid in cash as wages and salaries and then the employees had used this income to purchase the goods and services. This category includes the total value of these imputed sales. Wages and salaries in kind are explained in greater detail in paragraphs 6.17–6.18. For a defined-contribution pension scheme, this category also includes an imputed sale for the services rendered if the employer operates the scheme itself. In that case, the value of the costs of operating the scheme is recorded as an imputed contribution payable to the employee as part of compensation of employees. The counterpart of this amount should be recorded as an imputed sale of a financial service to the household sector (see paragraph 6.25).

5.141 On the accrual basis of recording, sales of goods are recorded when legal ownership changes. If that time cannot be determined precisely, recording may take place when there is a change in physical ownership or control. Transactions in services normally are recorded when the services are provided. Some services are supplied or take place on a continuous basis. For example, rentals are continuous flows and, in concept, are recorded continuously as long as they are being provided.

Fines, penalties, and forfeits (143)

5.142 Fines and penalties are compulsory current transfers imposed on units by courts of law or quasi-judicial bodies for violations of laws or administrative rules. Out-of-court agreements are also included. Forfeits are amounts that were deposited with a general government unit pending a legal or administrative proceeding and that have been transferred to the general government unit as part of the resolution of that proceeding.

5.143 In principle, fines and penalties charged on overdue taxes or penalties imposed for the evasion of taxes should be recorded in this category and not as taxes. However, it may not be possible to separate payments of fines or other penalties from the taxes to which they relate. In this case, the fines and penalties relating to a particular tax are recorded together with that tax, and fines and penalties related to unidentifiable taxes are classified as other taxes (116).

5.144 Most fines, penalties, and forfeits are determined at a specific time. These transfers are recorded on an accrual basis when the general government unit has an unconditional claim to the funds, which may be when a court renders judgment or an administrative ruling is published, or it may be when a late payment or other infringement automatically causes a fine or penalty. Fines also include bail set by courts, when bail conditions have been violated. When bail is set, repayable amounts received should be recorded as other accounts payable (3308), and should be recorded as revenue only once the conditions for the bail were violated. In cases where no actual payment is made when bail is set, government acquires a conditional claim. Such a conditional claim is not recorded in GFS until the conditions are fulfilled.

Transfers not elsewhere classified (144)

5.145Transfers not elsewhere classified (144) receivable include subsidies, as well as gifts and transfers from individuals, private nonprofit institutions, nongovernmental foundations, corporations, or sources other than governments and international organizations. These transfers could be classified according to the sector of the counterparty and whether they are current or capital transfers (see Table 5.11). If doubt exists regarding the character of a transfer, it should be classified consistently by both parties (see paragraph 3.18). Transfers not elsewhere classified (144) comprise current transfers not elsewhere classified (1441) (comprising subsidies (14411) and other current transfers not elsewhere classified (14412)), as well as capital transfers not elsewhere classified (1442).

Table 5.11Detailed Classification of Transfers Not Elsewhere Classified (144)
144Transfers not elsewhere classified
1441Current transfers not elsewhere classified
14411Subsidies1,2,3
14412Other current transfers not elsewhere classified1,3
1442Capital transfers not elsewhere classified1,3

Further breakdown/“of which” lines could allow for the identification of subsectors and individual units (see Table 3.1).

Further breakdown/“of which” lines could also identify whether these subsidies are subsidies on products or production.

Further breakdown/“of which” lines could also identify whether these transfers are related to specific natural resource or environmental revenue.

Further breakdown/“of which” lines could allow for the identification of subsectors and individual units (see Table 3.1).

Further breakdown/“of which” lines could also identify whether these subsidies are subsidies on products or production.

Further breakdown/“of which” lines could also identify whether these transfers are related to specific natural resource or environmental revenue.

5.146 Subsidies (14411) are current unrequited transfers that government units make to enterprises on the basis of the level of their production activities or the quantities or values of the goods or services they produce, sell, export, or import. As revenue, these are amounts receivable, mainly by public corporations. In rare cases, general government units and nonprofit institutions serving households can receive subsidies when the transfer receivable depends on the general regulations of the subsidy scheme, applicable to all producers—that is, market and nonmarket producers. Subsidies are explained in greater detail in paragraphs 6.84–6.91.

5.147Other current transfers not elsewhere classified (14412) are gifts and transfers of a current nature (other than grants or subsidies) from individuals, private nonprofit institutions, nongovernmental foundations, or corporations. These transfers could be in cash or in kind—for example, contributions to government of food, blankets, and medical supplies for relief purposes.

5.148 Capital transfers not elsewhere classified (1442) are gifts and transfers of a capital nature (other than grants) from individuals, private nonprofit institutions, nongovernmental foundations, or corporations. Examples of transfers included in this category are:

  • Major nonrecurrent payments receivable in compensation for extensive damages or serious injuries not covered by insurance policies. The payments may be awarded by courts of law or settled out of court. They include payments of compensation for damages caused by major explosions, oil spillages, etc.

  • International aid of a capital nature receivable after natural disasters from nonresidents other than international organizations and foreign governments42

  • Payments receivable for damage to property other than payments from an insurance settlement (insurance settlements are included in claims receivable (14513 or 1452))

  • Transfers receivable by public corporations from government units, to cover large operating deficits accumulated over two or more years43

  • Legacies or large gifts receivable by government or public sector units, including gifts of land, buildings, or research and development assets such as patents and copyrights

  • Exceptionally large donations receivable from households or enterprises to public sector units to finance gross fixed capital formation: for example, transfers for the construction or purchase of hospitals, schools, museums, theaters, and cultural centers, or gifts to universities to cover the costs of building new residential colleges, libraries, laboratories, etc.

  • Capital transfers from corporations, quasi-corporations, nonprofit institutions serving households, households, and nonresidents other than governments and international organizations (see paragraph 5.103) for the cancelation or assumption of a debt by mutual agreement with the government without the government incurring an effective liability toward them44

  • Amounts receivable in excess of the expected value of liabilities assumed for the provision of pension entitlements45

  • Community-built assets where responsibility for maintenance is then assumed by a public sector unit.

Premiums, fees, and claims receivable related to nonlife insurance and standardized guarantee schemes (145)

5.149 Premiums, fees, and claims receivable related to nonlife insurance and standardized guarantee schemes (145) comprise nonlife insurance premiums receivable46 by insurance schemes to provide entitlement to insurance against risks; claims receivable from insurance schemes by beneficiaries; and fees receivable for the issuance of standardized guarantees. While premiums and fees are always of a current nature, claims receivable could be of a capital or current nature. The types of insurance and standardized guarantee schemes, terminology used in insurance, and the statistical recording of flows and stock positions related to these are described in Appendix 4. To allow for consolidation of the general government and public sectors, this revenue should be classified according to the sector of the counterparty (see Table 5.12).47

Table 5.12Detailed Classification of Premiums, Fees, and Claims Receivable Related to Nonlife Insurance and Standardized Guarantee Schemes (145)
145Premiums, fees, and claims receivable related to nonlife insurance and standardized guarantee schemes
1451Premiums, fees, and current claims receivable
14511Premiums receivable1
14512Fees receivable for standardized guarantee schemes1
14513Current claims receivable1
1452Capital claims receivable1

Further breakdown/“of which” lines could allow for the identification of subsectors and individual units (see Table 3.1).

Further breakdown/“of which” lines could allow for the identification of subsectors and individual units (see Table 3.1).

5.150 Premiums, fees, and current claims receivable (1451) comprise nonlife insurance premium revenue and fees receivable for the issuance of standardized guarantees, as well as insurance settlement revenue that is not exceptional. On an accrual basis, premiums and fees receivable should include only those that provide insurance coverage in the reporting period. Receipts of prepayment of premiums and fees should not be recognized as revenue, but should be recorded as the incurrence of a liability in the form of insurance technical reserves (see paragraphs 7.183 and A4.79).

5.151 Capital claims receivable (1452) comprise exceptionally large insurance settlements receivable in the wake of a catastrophic event or disaster. It may be difficult for the parties to identify these exceptionally large settlements consistently, so as a simplifying convention, all nonlife insurance claims are classified as current transfers, unless it is necessary to record a capital transfer to be consistent with the national accounts.

The numbers in parentheses after each classification category are the GFS classification codes. Appendix 8 provides all classification codes used in the GFS framework.

The use of the term “cash” here does not refer to the cash basis of recording, but rather refers to the monetary nature of the settlement.

Revenue receivable in kind will not be recorded when using the cash basis of recording—no cash flows are involved (see paragraph 3.67).

[GFS] indicates that an item has the same name but different coverage in the 2008 SNA.

Social contributions [GFS](12) revenue excludes amounts receivable as employment-related pension and other retirement contributions that create a liability for future benefits payable (see paragraphs 4.50 and 5.95).

Similarly, refunds of expense are recorded as a reduction in expense, rather than revenue (see paragraph 6.4).

For a description of the treatment of inventories, see paragraphs 8.44–8.47.

These receipts are also referred to as “deferred revenue” or “advances” (see also paragraph 7.225).

These corrections in transactions recorded for revenue receivables should be distinguished from the case where a specific debtor is deemed bankrupt and amounts receivable are deemed to be uncollectable (see paragraph 10.57).

For a detailed description of the linkages between the GFS and the 2008 SNA categories of taxes, see Appendix 7.

For example, when tax credits on customs and other import duties (1151) on raw materials are used to support producers of exports, the full amount of customs and other import duties (1151) should be reflected, as well as the subsidy (25) to the producers of the exports.

Similar attribution principles could be applied to subsidies or social benefits.

These respective shares of the proceeds should reflect the underlying taxable economic event. If, under the revenue sharing arrangement, these shares amount to more or less than the underlying taxable economic event, a transfer for the difference should be recognized.

For a discussion on the tax attribution in the case of supranational authorities and regional cooperation, see Appendix 5.

The authority to raise taxes is an exclusive right of government units. As a result, when religious organizations are not part of general government, religious “taxes” are classified as transfers from households to religious organizations when compiling national accounts.

If the individuals may not opt out of the liability for the payment of the tax, or where the government imposes and sets the rates of such contributions, it may be a sufficient indication that such contributions to the religious organizations are indeed a tax.

For a definition and discussion of unincorporated enterprises, see paragraphs 2.32–2.33.

These types of estates are recognized as quasi-corporations and generally classified as captive financial institutions.

In compiling high-frequency GFS, the application of the accrual basis of recording would require the distribution of the tax receivable throughout the whole period of the taxable ownership (see paragraph 3.84).

Estate, inheritance, and gift taxes (1133) are one of the two categories of taxes that are considered to be capital taxes in the 2008 SNA. The other category is capital levies (1135). Capital taxes are taxes levied at irregular and very infrequent intervals on the values of the assets or net worth owned by institutional units or on the values of assets transferred between institutional units as a result of legacies, gifts, or other transfers.

To maintain consistency with codes used in the GFSM 2001, this code does not follow directly the code of the previous category of taxes. Taxes on capital and financial transactions (1134 in the GFSM 2001) were reclassified as 11414, one of the categories of taxes on goods and services (114), to improve consistency with the 2008 SNA.

This item was classified as 1134 in the GFSM 2001 (see footnote 21).

If these taxes are based exclusively on international travel, they are classified as other taxes on international trade and transactions (1156) (see paragraph 5.92).

If the fees are proportional to the cost of the service provided, they constitute a payment for an insurance-type transaction, in which case it will be classified as a premium in the category premiums, fees, and claims related to nonlife insurance and standardized guarantee schemes (145). The criterion of proportionality between payments and provision of an insurance-type of service (including payments for the risk element) should be examined on a case-by-case basis. The existence of an institutional unit with a full set of accounts operating a fund that functions on insurance rules may indicate that the payment is for an insurance-type of service.

If an enterprise of this type generates profits from its exports or imports of products, and a government unit provides a subsidy on other products, then the taxes and subsidies should be separately recorded to the extent possible rather than recording only the net value of taxes minus subsidies.

The institutional units involved, classification, and recording of flows and stock positions related to social protection are described in Appendix 2.

The 2008 SNA allows some flexibility regarding the recording of pension entitlements of unfunded pension schemes sponsored by government for all employees. Given the different institutional arrangements in countries, and using this flexibility, only some of these pension entitlements may be recorded in the main sequence of accounts (core accounts). However, in such instances, a supplementary table is to be presented that discloses the proportion of pension provision covered in the core accounts with some approximate estimates of the liability arising from the remaining schemes (see the 2008 SNA, paragraph 17.193).

Revenue from imputed contributions excludes imputed contributions to employment-related pension and retirement schemes, which are recorded as the incurrence of a liability.

Property income [GFS] (141) differs due to the treatment of financial intermediation services indirectly measured (FISIM) in interest [GFS] (1411).

Interest [GFS] (1411) differs due to the treatment of FISIM (see paragraph 6.81 and Appendix 7).

Government or public sector units, in their capacity as shareholders, may in some cases also acquire equity by transferring nonfinancial assets to a corporation.

See paragraph 5.116 for a discussion on distributable income.

The criteria to identify quasi-corporations are described in paragraph 2.33.

Investment income disbursements by definition also include investment income attributed to participants in pension schemes. However, public sector institutional units are not entitled to pension benefits, and therefore this subcategory of investment income disbursement is not applicable as a GFS revenue category.

A more detailed discussion on the boundary between alternative uses of natural resources is presented in the context of the discussion on leases, licenses, permits, and other contracts to use a natural resource in Appendix 4.

Basic prices are prices before taxes on products are added and subsidies on products are subtracted.

The rentals paid by tenants of buildings are treated as payments for the provision of real estate activities or housing services.

Direct investment is a category of cross-border investment associated with a resident in one economy having control or a significant degree of influence on the management of an enterprise that is resident in another economy (see the BPM6, paragraphs 6.8 and 11.40–11.47).

Distributable income is discussed in paragraph 5.116.

See paragraph 10.33 for the treatment of retained earnings of other corporations.

The 2008 SNA research agenda includes a proposal to extend the treatment of distributing retained earnings to the owners of other corporations, in particular of public corporations.

International aid receivable from resident and nonresident general government units and international organizations is classified as grants (see paragraph 5.101).

Where a realistic expectation exists that such amounts will be repayable, as indicated by certain criteria (see Box 6.3), the transaction should be classified as the acquisition of a financial asset. A regular transfer covering an operating deficit is recorded as a subsidy.

Details on debt cancellation, debt assumption, and other government debt operations can be found in Appendix 3, and in the PSDS Guide, Chapter 4.

Amounts receivable up to the expected value of the liabilities should be recorded as transactions in financial assets and liabilities (i.e., the incurrence of a liability) (see paragraph 9.67).

In the 2008 SNA, nonlife insurance premiums receivable are partitioned into a sale of a service and a transfer. In GFS, the entire premium is considered a transfer. Fees receivable for one-off guarantees are recorded as administrative fees (see paragraph 5.138).

See Appendix 4 for an illustration of the recording of transactions and stock positions related to insurance, including standardized guarantees.

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