Page 417 - Invited Paper Session (IPS) - Volume 1

IPS173 Tatiana Mosquera Yon et al.
As an in-depth analysis of the MNEs implies to talk about individual data,
the principle of confidentiality must be guaranteed in order to allow the MNEs
accounting, excise and custom teams to cooperate fully. Regarding
confidentiality, it is also important to receive an allowance of the MNEs to
share confidential data with the experts of the other statistical institutions of
both countries. To reach these two goals it is of utmost importance to create
an atmosphere of trust between all stakeholders. Therefore, all steps followed
by the other work stream must be clearly presented to the MNEs team, which
implies frequent and regular meetings explaining the achieved steps and the
coming ones. These meetings took place on a face to face basis, mainly at the
beginning and the end of the process. In between, due to practical
considerations, these meetings were mostly conference calls.
Once the confidentiality is guaranteed, the conceptual and methodological
issues can be debated. The first step is a stocktaking where the MNE team
precisely explain how the group operates inside the countries and at the
international level. This information is the key element to identify all relevant
cross border flows and to characterise them. After the international flows are
filtered out, the data reported by the MNEs are scrutinized to evaluate if they
reflect the MNEs activities properly.
In some cases, it appeared that the reporting was not relevant, especially
when it covers intra-group flows. When the organisation of the MNE is highly
centralised, a significant part of the production process is guided by the
headquarters, which sometimes also centralise purchases of key components
of the final product. In such a case, the headquarters have the economic
ownership of the purchased and final goods. Several options of reporting are
open to the MNE. The most frequent is the following: Taking the example
above i.e. a component is purchased by headquarters located in a country A
and is delivered to a factory in a country C from a country B. The factory in
country C reports an import from country B, to materialize the inflow of goods
to the customs authority of country C. The headquarters in the country A
report a financial flow to the country B to the BoP compilers of the country A
to materialize the payment of the invoice from country B.
Regarding that reporting, the BoP compilers must be aware that the
economic owner of the component is the MNE’s headquarters but there is no
reporting in the goods item of the country A’s BOP. In country C, a final import
of goods is reported that the BoP compiler (due to a wrong coding in its FTS)
may take into account in the goods item even though there is no change of
ownership between the countries C and B. As MNEs generate important flows
of this type, this case was analysed by the two work streams to define a
homogeneous reporting scheme for headquarters and the factories.
After taking all information about such transactions into account, it was
decided that the import of the component in country C should be reported as

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