Government Finance Statistics Manual 2014

336 Government Finance Statistics Manual 2014

cooperation/coordination arrangements rather than

eff ective common fi scal policies.

Residence in an economic union

A5.24 Th e economic territory of an economic

union consists of the economic territory of the mem-

ber countries or jurisdictions, and the regional institu-

tions that comprise the same, or a subset of the same,

economies and are set up to manage the functioning

of the economic union.

A5.25 Being a resident of an economy of an eco-

nomic union implies being a resident of the economic

union. Regional organizations that operate within the

boundaries of the economic union territory are also

residents of the union. However, regional organiza-

tions whose membership of economies is not the same

as, nor a subset of, those in the economic union should

be regarded as nonresidents of the economic union.^9

Recording some specifi c transactions related to regional organizations.

A5.26 Th e common budget of the union that is man-

aged by a regional organization may be funded by dif-

ferent types of sources. Th e main sources are taxes and

grants. For example, in the EU, the majority of EU bud-

get resources is based on gross national income (GNI)

and value-added tax revenues of individual countries.

A5.27 Direct levies for the account of the com-

mon budget—in practice oft en collected by member

governments—are recorded as taxes of the common

budget in accordance with the tax attribution princi-

ple (see paragraphs 5.33–5.40). Such revenue cannot

be considered as part of government revenue of the

member economy because they are collected by the

member economy on behalf of the union. In accor-

dance with the accrual basis of recording, the collec-

tion of the taxes will give rise to other accounts payable

(3308) for the collecting member government, and

other accounts receivable (3208) in the accounts of the

regional organization, at the time the taxes accrue to

the international organization. Th ese tax fl ows must

be recorded gross of any collection fees. If there are

specifi c provisions related to collection fees (based on

actual expenses, a forfeited amount, or a percentage),

the latter should be considered as revenue generated

(^9) See paragraphs 2.6–2.21 for a description of the use of the resi-
dence criteria in GFS.
by incidental sales by nonmarket establishments (1423)
in the accounts of the member government, and an
expense for use of goods and services (22) in the ac-
counts of the regional organization.
A5.28 Th e union agencies may also be fi nanced di-
rectly by contributions from the members, according
to agreed criteria. Such contributions may be agreed
portions of certain taxes and fees. Th ese taxes and
other revenues are attributed to the member govern-
ments and are not collected on behalf of the union, but
for their own account. Th erefore, the respective mem-
ber governments record the full collectable amount as
taxes and other revenues in their accounts, and a sub-
sequent grant payable to the regional organization.
A5.29 Expense of the regional organization cov-
ers its administrative and operating costs, but also
costs associated with executing common policies for
the benefi t of the members of the union. Administra-
tive and operating costs impact mainly the economy
where the regional organization is physically located.
Th ese amounts are usually not signifi cant and, where
a common budget is developed, they represent a small
portion of total expense of the regional organization.
Of these, a small part could possibly be transactions
with the host government and should be recorded in
the government accounts of the member in accor-
dance with the economic nature of the transaction.
A5.30 Expense associated with executing common
policies for the benefi t of the members of the eco-
nomic union impacts specifi c categories of benefi cia-
ries in the respective member countries. To accurately
record these transactions, the ultimate benefi ciary
and nature of the expense should be identifi ed regard-
less of the practical and/or institutional arrangements
for channeling the amounts payable from union agen-
cies to these economic benefi ciaries.

• Where such expenses from the union budget
  managed by the regional organization cover costs
  directly benefi ting the recipient member govern-
  ment units (in the context of a given program—
  e.g., projects for infrastructures, research and
  development), revenue in the form of grants
  from international organizations (132) should be
  recorded in the member government accounts
  when all conditions have been met.


• Where member government units act as agents
  on behalf of the union, all transactions conducted