## BPM7 Chapter 4 / 2025 SNA Chapter 5. Residence, Institutional Units, and Sectors: Annotated Outline

## Source details

**Canonical URL:** [BPM7 Chapter 4 / 2025 SNA Chapter 5. Residence, Institutional Units, and Sectors: Annotated Outline](https://www.imf.org/-/media/files/data/statistics/bmp7/chapters/ao-sna-ch-5-bpm-ch-4.pdf)

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### Introduction — scope and structural updates
- Purpose: joint annotated outline covering topics for the chapter on Residence, Institutional Units, and Sectors, with BPM-relevant issues included in BPM and SNA-relevant issues included in SNA.
- Structure: follows the 2008 SNA Chapter 4 structure with targeted updates and cross-references to BPM6, guidance notes (GNs), and other manuals.
- Key adjustments and inclusions:
  - Residence and Economic Territory
    - Will cover 2008 SNA paragraphs 4.10–15 and BPM6 paragraphs 4.113–115.
    - Includes discussion of economic territory of international organizations, special zones (free trade zones/offshore banks and offshore financial centers), changes in economic territory, and joint zones (BPM6 paragraphs 4.7–10).
    - Will include the definition of population and related discussion from 2008 SNA paragraphs 19.9–11.
  - Specific residence issues for (i) different institutional units; (ii) assets/liabilities held by groups including residents and nonresidents; and (iii) change in residence of entities other than persons will be covered in Section J.
  - Sectoring and Economic Behavior
    - Following GN F.7, fintech companies should be classified within existing institutional sectors/subsectors depending on economic objectives, functions, and behavior — no new sector “Fintech”.
    - Countries with significant fintech activities may consider an “of which” category for statistical/analytical needs.
  - Overview of Institutional Sectors
    - Incorporates 2008 SNA paragraphs 4.24–32, SNA institutional sector classification and international accounts classification (updating BPM6 Tables 4.1 and 4.2 per GN F.1), and BPM6 paragraphs 4.60–61.
  - Subsectors revision
    - Heading revised to “Domestic and foreign control” (based on GN F.1).
    - Recommend identifying NFCs and FCs controlled domestically vs. foreign-controlled; domestically controlled split into public corporations (government-controlled) and national private corporations.
    - Introduce “of which” items for:
      - domestically controlled public and private corporations (financial and nonfinancial) that are part of a domestic multinational;
      - foreign controlled special purpose entities (SPEs) for NFCs (S.11) and FCs (S.12).
    - 2008 SNA Figure 4.1 to be updated accordingly.
  - IMF reporting guidance (external sector statistics):
    - More disaggregated institutional sector breakdowns to be followed: (a) other financial corporations (OFCs) as supplementary items; (b) separately identify NFCs from households and nonprofit institutions serving households; (c) introduce “of which” items for SPEs as supplementary items for deposit-taking corporations, OFCs, and NFCs (per GN F.1).
  - Chapter organization: Sections B–J covering Corporations, Nonprofit Institutions, Nonfinancial Corporations, Financial Corporations, General Government, Households, Nonprofit Institutions Serving Households, Rest of the World, and Specific Issues Associated with Residence.

### Corporations — types, special cases, ownership and control
- Types of Corporations
  - Continues 2008 SNA discussion on legally constituted corporations and quasi-corporations.
  - New sub-topic “institutional units with cross-border elements” incorporating BPM6 items:
    - branches including construction projects and production delivered from base (BPM6 paragraphs 4.26–33);
    - notional resident units for land and other natural resources owned by nonresidents (BPM6 paragraphs 4.34–40);
    - multiterritory enterprises (BPM6 paragraphs 4.41–44);
    - joint ventures (BPM6 paragraphs 4.45–46);
    - quasi-corporations identified prior to incorporation (BPM6 paragraph 4.47);
    - trusts (BPM6 paragraph 4.48) and other incorporated enterprises (BPM6 paragraph 4.49).
- Special Purpose Entities (SPEs)
  - SNA paragraphs 4.55–67 updated with BPM6 paragraphs 4.50–52 and GN G.4 (definition and recommendation in paragraph 29).
  - Clarification: use term SPEs only for entities with direct and indirect foreign control; do not use SPE for any financial entity created for special purposes.
  - Illustrative guidance:
    - captive financial institutions wholly owned and controlled solely by resident parent entities should not be treated as SPEs — include under FCs (BPM6 paragraphs 4.82–83).
    - resident-controlled affiliates (conduits, captives, etc.) should be classified by typology within the corresponding institutional sector, not as SPEs.
    - special purpose units of general government: include under Section F (general government) if resident of government economy; if non-resident, treat as separate units (2008 SNA 4.67 / BPM6 4.93).
    - Recommended to introduce enhanced imputations to better reflect fiscal operations of government-controlled SPEs (GN D.5); cross-reference to BPM7 Chapter 8.
  - Alignment: language to be aligned with GFSM 2014 paragraphs 2.136–139.
- Special Cases: head offices (HO) and holding companies (HC)
  - Guidance following SNA clarification note N&N 37 on delineation of HO and HC: determining whether HO/HC is a separate institutional unit and distinguishing HCs from HOs.
- Ownership and Control of Corporations
  - Subsidiary definition: corporation B is subsidiary of corporation A if corporation A holds more than 50 percent equity in corporation B (4.73-b will be deleted).
  - Control by a Non-Resident Unit: paragraph 4.81 updated to reflect agreement based on GNs G.2 and D.10 and BPM6:
    - control decided based on equity holding entitling more than 50 percent of voting power;
    - not based on other criteria such as board control, appointment/removal of key personnel, or control of key committees.

### Subsectors and sectors — nonfinancial, financial, government, households, NPISH, rest of world
- Nonfinancial Corporations Sector
  - 2008 SNA paragraph 4.96 (second criteria) and first column of SNA Table 4.1 updated based on GN F.1.
- Financial Corporations Sector
  - Updated breakdown of FCs based on GN F.1 for national accounts and external sector statistics.
  - 2025 SNA will include limited details on FC subsectors (detailed discussion in 2025 SNA Chapter 29 Financial Corporations).
  - BPM7 to continue providing detailed subsector guidance (paragraphs 4.67–90) and align with 2025 SNA Chapter 29 where possible.
- General Government Sector
  - Four sub-sections: government units as institutional units; general government sector and subsectors; alternative method of subsectoring; other issues related to government units.
  - Other issues include:
    - government entities resident abroad (to be added from BPM6 paragraph 4.93);
    - restructuring agencies (BPM6 paragraphs 4.94–95).
- Households Sector
  - Following GN WS.2, guidance for additional household breakdowns to account for distribution of income, consumption, saving, and wealth.
  - Note: no clarity at this stage about preferred definition of income and consumption (subject to testing).
- Nonprofit Institutions Serving Households (NPISH)
  - Retains same subsections as 2008 SNA.
- Rest of the World
  - International Organizations: updates from BPM6 paragraphs 4.103–107.
  - Regional International Organizations (including central banks of currency unions)
    - Updates based on BPM6 paragraph 4.142.
    - Clarify two types of currency unions (CUs): centralized and decentralized.
    - National agencies of centralized CUs treated as institutional units separate from the CUCB head quarters (per GN B.3).
    - See BPM7 Annex 3 for additional details.

### Specific issues associated with residence (Section J)
- Structure: four sub-sections based on Section E, Chapter 4, BPM6 (E. section), separated from core residence principles in Section A because of relevance mainly to international accounts.
- Subsections and coverage:
  1. Residence of different types of institutional units (BPM6 paragraphs 4.116–144): residence of households, residence of enterprises, residence of other institutional units.
  2. Assets and liabilities held by groups that include both residents and nonresidents (BPM6 paragraphs 4.145–164).
  3. Change in residence of institutional units (BPM6 paragraphs 4.165–167).
  4. Alternatives to the residence concept (BPM6 paragraph 4.168).
- Additional topics:
  - Crypto assets without corresponding liability: discussion whether they should be treated as domestic or foreign assets if deemed financial assets (following GN F.18); cross-reference to Chapter 7 (Balance Sheet: International Investment Position), BPM7.
- Note: “Data by partner economy” (BPM6 paragraphs 4.146–164) will not be included in this chapter; it will be presented as a separate annex with additional guidance.

### Schematic overview and tabular/figure components
- Planned inclusions:
  - Figure 4.1: Illustrative Allocation of Units to Institutional Sectors (updated).
  - Table 4.1: 2025 SNA Classification of Institutional Sectors.
  - Table 4.2: BPM7 Classification of Institutional Sectors.
  - Table xx: Subsectors of the Nonfinancial Corporations.
- Chapter map: Sections A–J with detailed subheadings mirroring the annotated outline and indicating where BPM6/2008 SNA/GFSM 2014/MFSMCG inputs are integrated.

### Key recommendations and technical points for adoption
- Fintech: classify fintech companies within existing institutional sectors/subsectors per economic objective, functions, and behavior; allow “of which” breakdowns for significant fintech activity (GN F.7).
- Subsectors and control:
  - Use equity ownership entitling more than 50 percent of voting power as control criterion (GNs G.2 and D.10; BPM6 alignment).
  - Identify domestically controlled vs. foreign-controlled NFCs and FCs, and split domestically controlled into public corporations and national private corporations.
  - Introduce “of which” items for domestic multinational affiliates and foreign-controlled SPEs for host-jurisdiction reporting.
- SPEs: restrict the SPE label to foreign-controlled entities; treat resident-owned special-purpose-type units according to typology and institutional sector.
- Government SPEs: if government-controlled SPEs are non-resident, recommend enhanced imputations to better reflect fiscal operations (GN D.5; cross-reference to BPM7 Chapter 8).
- Reporting to IMF (external sector statistics): adopt more disaggregated institutional sector breakdowns including OFCs as supplementary items and “of which” SPE items (GN F.1).
- Households: pursue additional household breakdowns for distributional analysis (GN WS.2); definitions of income and consumption remain to be tested.

### Questions posed to the Committee and AEG
- Suggestions on the draft outline of the chapter?
- Agreement with the proposed structure and coverage of topics presented in the outline?

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_Source: https://www.imf.org/-/media/files/data/statistics/bmp7/chapters/ao-sna-ch-5-bpm-ch-4.pdf_