Page 413 - Invited Paper Session (IPS) - Volume 1

IPS173 Tatiana Mosquera Yon et al.
For BoP compilers, it is a real challenge to identify which entity assumes risks
and rewards in an MNE-Group. It requires having a precise and complete
knowledge of how the MNE is organized and operates.
Although the BPM6 gives in several paragraphs (e.g. paragraph 5.3) some
guidance for compilers to identify the economic owner inside a group, the
explanation of the concept of economic ownership versus legal ownership to
their MNEs’ correspondents is however not a simple and often time
consuming task.
Once this definition is explained, it becomes important to analyse the
organisation of MNEs to identify which entity assumes the risk and rewards.
There may be several entities or just one, depending on how the MNEs is
organised. In the MNEs involved in the analysis, the identification of the
economic owner of the produced goods and services was a challenge. Their
very complex organisation and the multiple flows between the entities of the
group did not allow an unambiguous identification of the economic owner,
despite the characteristics given by the BPM6.
When the economic owner is identified inside the group, it can have
impact on BoP compilation since goods may be delivered from Germany,
which is recorded in Foreign Trade Statistics (FTS), but sold by the economic
owner located in France. Under such circumstances, the export must be
reported in France outside the FTS source and to FTS in Germany, using a code
which indicates that the goods are not owned by the exporter.
Once these flows are clearly explained by the MNEs, it becomes relevant to
share the information with colleagues from the counterpart countries to make
sure that the flows are treated in the same way and reported symmetrically in
FTS and BoP.

Overview of the MNEs involved in the work stream
The structure of the MNEs involved in the analysis can be schematized as
shown below (see illustration 1).

402 | I S I W S C 2 0 1 9