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Goods sent abroad for processing

Goods sent abroad for processing. Previous question. Records goods sent for processing gross or net? Opinions divided both in BOPCOM and AEG. “Gross” and “net”. Gross : impute a change of ownership Net: do not impute change of ownership. BPM position. Goods A to B to A - yes

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Goods sent abroad for processing

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  1. Goods sent abroad for processing

  2. Previous question • Records goods sent for processing gross or net? • Opinions divided both in BOPCOM and AEG

  3. “Gross” and “net” • Gross : impute a change of ownership • Net: do not impute change of ownership

  4. BPM position • Goods A to B to A - yes • Goods A to B1 to B2 - no • Goods A to B to C - no • EXCEPT • If B is unincorporated subsidiary of A • If B is direct investment ent of A

  5. SNA position (domestic) • Goods A to B to A - no • Except if B is establishment of A • Goods from abroad - yes

  6. Summary • We have a hybrid system • Not transparent for either compilers or analysts

  7. Accounting implications • Goods out less goods in SHOULD be equal to processing fee • Different data sources • Different products • Different times • Holding gains

  8. Analytical implications • What is processor doing? Who takes on risk of production? • Major interaction with out-sourcing • Ratio of imports to domestic production • Is processing a good or a service?

  9. Alternative • Always impute change of ownership or • Never impute change of ownership

  10. SNA (domestic) • Either alternative significant change especially for input output tables • Changing rules for domestic processing might be more significant that for international

  11. Always impute change own

  12. Never impute change own

  13. Supply and use • Intermediate cons 100 • Value added 20 • Output 120 • OR • Value added / Output 20 • Intermediate cons/output 120

  14. Problem • Goods sent for processing in period t • Goods returned after processing in period t+1

  15. Questions for the AEG • Always impute change for goods going abroad? • Never impute change for goods going abroad? • Keep present situation? • If a or b, make same changes for domestic processing?

  16. Questions for BOPCOM • If AEG says always impute change, would BOPCOM follow or go for never? • If the latter would this apply to unincorporated establishments and to direct investment enterprises

  17. Both groups • However processing recording, robust valuation needs values of goods on and out (from Customs) reconciled with processing fee (from business) • Does BOPCOM support provision of this data?

  18. AEG conclusions • Current position undesirable • Never impute change of ownership for goods sent abroad for processing • Adopt same approach for domestic processing even between related enterprises • (Consequences for input output)

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