International Trade in Services Survey - Israel

1. International Trade in Services Survey - Israel

2. ITRS and problems in the estimation of International Trade in Other Business Services • Declining quality of ITRS data • Increasing amount of transactions between foreign and Israeli residents, taking place abroad and unregistered in the domestic banking system • Type and geographical breakdown of International Trade in Services

3. International Trade in Services Survey (ITSS) • Frequency The survey will be conducted annually, starting from calendar year 2004. Owing to the delay in the completion of the 2004 survey, 2005 has been omitted and estimations for this year will be extrapolated from the 2004-2006 surveys. • Population All business units exporting and importing “Other business services”

4. International Trade in Services Survey (ITSS) • Sampling frame • Exports • The sampling frame is based on VAT files including all companies with exempted VAT revenues(mainly exports) • Exempted VAT revenues not resulting from exports (sale of fruits and vegetables, sales to VAT exempted city of Eilat, etc.) are deducted. The remaining exempted VAT revenues are considered to be an estimate of total exports (goods and services)

5. International Trade in Services Survey (ITSS) • From the above exempted VAT revenues, goods exports are deducted by “Company Number”,according to customs files • Remaining exempted revenues are considered to be a first estimate of services’ exports and are the basis for sample selection • Sampling frame for exports excludes: • Unincorporated • Industries as follows:

6. International Trade in Services Survey (ITSS) • All agriculture: ISIC 01-09 • Transportation: ISIC 60.61,62,63,64 • Hotels and accommodation services : ISIC 55 • Restaurants and dining services: ISIC 56 • Diamonds related units: ISIC 37,5135 • Communications: ISIC 66 • Banking and other financial institutions: ISIC 67 • Insurance institutions: ISIC 68 • Services by domestic personnel: ISIC 97 • Extra-territorial organizations– ISIC 99

7. International Trade in Services Survey (ITSS) • Exempted VAT revenues corresponding to “Consolidated companies for VAT purposes”, have been allocated among companies belonging to the groups, according to relative total revenues (This method was used only for the 2004 Survey and was changed for the 2006 Survey – See bellow) • Imports • Sampling frame based on ITRS identified data on imports of services • Sampling frame for imports excludes: • Unincorporated • Industries as follows:

8. International Trade in Services Survey (ITSS) • All agriculture: ISIC 01-09 • Transportation: ISIC 60,61,62,63,64 • Diamonds related: ISIC 37,5135 • Communications: ISIC 66 • Extra-territorial organizations – ISIC 99

9. Company Number • All registered companies are assigned a single “Company Number” by the Companies Registrar (Ministry of Justice) • The Company Number is used also by other government agencies to identify companies in their files, as VAT authorities, Tax Income, Social Security, Customs, etc. • As a result, a link between data in different institutions can be established in a relative simple way

10. International Trade in Services Survey (ITSS) • Sample • Exports and Imports Stratified sample by Economic Activities of companies and size levels determined by expected volume of exports and imports of services. The Lavallee-Hidiroglou (1988) stratification algorithm is used to set the boundaries and to allocate the sample. The top size stratum in each Economic Activity is a take-all stratum and all the companies are included in the sample. In the other strata, simple random sampling without replacement is drawn according to the allocation.

11. International Trade in Services Survey (ITSS) • Questionnaire Includes the following (2004 survey) : • Types of services according to EBOPS (21 categories) • Industries of exporters/importers (ISIC) • Trade by type of foreign partner: foreign affiliated companies or other foreign residents • Geographical breakdown of exports and imports

12. 2004 Survey – Major Shortcomings • In many cases, allocation of exempted VAT revenues corresponding to “Consolidated companies for VAT purposes” - among companies in the group and based on total turnover of companies - resulted in relevant discrepancies between expected and final figures (increment of “zero” cases) • ITRS threshold for identified transactions is US$ 50,000, which conduced to - approximately – an only 70% of identified volume of transactions related to imports of services to be included in the sampling frame

13. 2004 Survey – Major Shortcomings(cont.) • Consequently, 33% of total imports of services haven’t been classified by the survey • Industries 50-51-52 (Wholesale and Retail Trade) haven’t been classified yet, as the sampling of these industries was problematic in the 2004 survey. Additional procedures for these industries are currently considered

16. ITSS – Future improvements • Alternative or additional sampling frame for imports of services – ITRS covers only transactions above US$ 50,000 • The allocation of VAT exempted revenues among companies in “Consolidated companies for VAT purposes”, has been changed from the 2006 survey. The sample is now selected on the base of exempted revenues of the whole “Consolidated companies for VAT purposes” • Additional sampling of companies in trade industries is planned before completion of the 2006 survey

17. Thanks for your attention !