334 Government Finance Statistics Manual 2014
A5.12 Th e customs duty revenue is attributed to
the designated agency and should be recorded as cus-
toms and other import duties (1151) at the time the
underlying economic event occurs (e.g., imports of
goods or services) that gives rise to the customs du-
ties, along with a counterpart entry increasing cur-
rency and deposits (3202) or other accounts receivable
(3208).
A5.13 A revenue-sharing agreement may deter-
mine that the designated agency is to distribute the
revenue pool to the participating national govern-
ments on the basis of an underlying economic event
(e.g., imports of goods or services). In this case, rev-
enue in the form of a grant (13), with a counterpart
entry in other accounts receivable (3208), is recorded in
the accounts of the member countries at the time the
underlying economic event occurs. In the accounts of
the designated agency, an equal amount of expense in
the form of a grant (26) with a counterpart entry in
other accounts payable (3308) should be recorded. De-
pending on the sector classifi cation of the designated
agency, the grant revenue should be recorded as either
current grants from international organizations (1321)
or current grants from foreign governments (1311),
while the grant expense should be classifi ed as grants
to foreign governments (261) or grants to other general
government units (263). Th e size of the grant depends
on the nature of the revenue-sharing agreement. How-
ever, these revenue distributions may display an ele-
ment of income redistribution among the members
of a regional arrangement. Th at is, the distributions
are not based on underlying economic events but are
rather made to an agreed and negotiated formula. In
this case, the grant should be recorded at the time the
member economy acquires an unconditional claim
on the designated agency. At the time of distribution,
the member economies extinguish the other accounts
receivable (3208), with a corresponding increase in
the fi nancial asset currency and deposits (3202). Con-
versely, the designated agency would record a de-
crease in other accounts payable (3308) and a decrease
in the fi nancial asset currency and deposits (3202).A designated agency levies and distributes
duties but member governments collect
duties on behalf of the designated agency
A5.14 If national governments act as collecting
agents on behalf of the designated agency for the cus-toms duties from importers in their own economy, the
collecting national government should record only
transactions in fi nancial assets and liabilities when the
economic event occurs. A liability in the form of other
accounts payable (3308) to the designated agency
should be recorded, with a counterpart entry in cur-
rency and deposits (3202) or other accounts receivable
(3208). Because the customs duty revenue is attrib-
uted to the designated agency, they should record a
fi nancial claim on the member collecting the customs
duties, in the form of other accounts receivable (3208)
as the revenue in the form of customs duties accrues.
When the collecting national government makes the
payment to the designated agency, this member gov-
ernment records a reduction in fi nancial assets in the
form of currency and deposits (3202), with a counter-
part entry to extinguish the liability in the form other
accounts payable (3308).
A5.15 Distributions of the revenue pool by the
designated agency are treated as described in para-
graph A5.13.Member governments have collective rights to levy, collect, and distribute the duties
A5.16 If member governments have collective
rights to levy the customs duties under the customs
union agreement, the custom duty revenue is attrib-
uted to the member governments according to the
underlying economic activity that gives rise to the
customs duties. Th e total customs duty revenue attrib-
uted to each member government is in proportion to
the respective underlying economic activity that gives
rise to the customs duties. Each member government
records customs duties due on their imports on an
accrual basis (i.e., when the underlying economic
event occurred), regardless of how the revenue pool
is to be shared or where the customs duties are col-
lected. Should the customs union agreement provide
for any member government to receive a larger share
of the customs pool than is evidenced by the underly-
ing economic activities, a grant revenue (131)/expense
(261) should be recorded between member govern-
ments at the time the unconditional claims are estab-
lished, with a corresponding entry in other accounts
receivable (3208)/payable (3308).
A5.17 It is possible that the ports of entry for
the customs union are situated in one or a small
group of member economies. If so, there could be a