## B9: Treatment of External Assets and Related Income Declared Under Tax Amnesty — SECTION I: THE ISSUE

## Source details

**Canonical URL:** [B9: Treatment of External Assets and Related Income Declared Under Tax Amnesty — SECTION I: THE ISSUE](https://www.imf.org/-/media/files/data/statistics/bpm6/bptt/b9-treatment-of-external-assets-and-relatedincome-declared-under-tax-amnesty-in-external-sector-stat.pdf)

## Other formats

- [Markdown version](/-/media/files/data/statistics/bpm6/bptt/b9-treatment-of-external-assets-and-relatedincome-declared-under-tax-amnesty-in-external-sector-stat.pdf.md)
- [Structured JSON version](/-/media/files/data/statistics/bpm6/bptt/b9-treatment-of-external-assets-and-relatedincome-declared-under-tax-amnesty-in-external-sector-stat.pdf.json)

---

### Background
- The Guidance Note (GN) states that many countries have implemented tax amnesties on external assets and related income in recent years, prompting compilers to seek guidance on treatment in external sector statistics (ESS).
- As per publicly available information cited in the GN, around twenty countries have implemented one or more tax amnesty schemes during the last two decades.
- The GN notes that explicit guidance on treatment of external assets and related income declared under tax amnesties is not available in macroeconomic statistics manuals, including BPM6; GFSM 2014 contains limited references on timing and measurement of tax revenue from tax amnesties.
- Definition: the GN describes a tax amnesty as a limited-time opportunity for a specified group of taxpayers to report undeclared income and assets relating to earlier tax periods and pay a defined amount in exchange for forgiveness of tax liability, without fear of criminal prosecution.
- Typical scope: schemes often cover undisclosed domestic and external assets (currency and deposits, equity and investment funds shares, debt securities, gold, real estate, etc.) of residents and associated income (interest, dividends, rental).
- Motives: governments use tax amnesties to repatriate undeclared external assets, collect revenue from accrued-but-unpaid taxes, speed up tax payments, and capture revenue from previously undisclosed transactions or events.
- Country practices differ; Annex I summarizes approaches and shows three broad categories currently applied in ESS:
  - The tax amnesty does not imply any change in ESS: declared assets/income are already incorporated in current estimates (e.g., via mirror data) or are insignificant.
  - Declared assets/income recorded only in the current period: incorporations are made only in the period of declaration without backward adjustments; income recorded only for amount accrued in current period.
  - Declared assets/income recorded in current and previous periods: incorporations made in period of declaration with adjustments carried backward to record assets and income in their accrual periods.

### Treatment in GFSM 2014 (as cited by the GN)
- GFSM 2014 distinguishes two broad types of amnesties:
  - Payment of taxes on undeclared income/domestic assets (where tax authorities lacked prior information).
  - Payment of taxes on undeclared income/external assets (where tax authorities lacked prior information).
- GFSM 2014 follows accrual recording: any adjustment to taxes due to under/overestimation should be implemented in the period in which the under/overestimation occurred; if time cannot be identified, adjustment is recorded when the need for adjustment is identified (paragraphs 5.19 and 5.20, GFSM 2014).

### Issues for Discussion — Practical Scenarios for Compilers (as outlined by the GN)
- Two practical scenarios for compilers:
  - Declared assets/income already estimated from other sources:
    - If declared assets have been already estimated in the balance of payments and IIP, compilers should assess accuracy of current estimates versus new information; if appropriately included, the new data serve as cross-checks; if differences arise, adjustments should be made.
  - Declared assets/income not incorporated in current estimates earlier:
    - If not estimated and considered significant or if differences are significant, adjustments should be undertaken in ESS to record corresponding instruments.
    - Adjustments should ideally be implemented as transactions in the relevant periods, ensuring consistency between income and asset adjustments.

### Practical Guidance for Adjustments (as recommended in the GN)
- External assets:
  - If timing of original transactions can be accessed or estimated, adjustments should be made to the relevant data categories in the corresponding periods.
  - If timing is not known, compilers should allocate assets and income declared to back periods based on approaches discussed in the GN; the number of periods for allocation should be decided in consultation with tax authorities and relevant government agencies.
  - Two options for adjusting the IIP and other flows:
    - Adjustment option A: Adjustment to stocks homogeneously over the years by smoothening stocks applying the growth percentage in year t going backwards; changes to revaluations based on their weight over the stocks for each period; changes to other changes in volume of assets (OCVA) obtained as residual; balance of payments transactions are not adjusted.
    - Adjustment option B (preferred in the GN): Adjustment to the balance of payments, the IIP, and other flows: adjustment to stocks homogeneously over the years by smoothening stocks applying the growth percentage in year t going backwards; changes to transactions and revaluations based on their weight over the stocks for each period; OCVA obtained as residual.
  - Adjustments to current period estimates only: adoptable only when historical adjustments are not possible; involves recording declared external assets in the IIP in the corresponding instrument through “other flows” account. The GN suggests reviewing the definition of OCVA (paragraph 9.7 of BPM6) to include “transactions corresponding to previous periods raised from tax amnesties.” Metadata should clearly explain reasons for jumps in IIP assets in tax amnesty periods.
- Income:
  - Income declared under tax amnesty should follow the accrual principle; compilers need to identify periods when declared income was accrued.
  - The GN provides a simple approach for income adjustments (see Annex V).

### Outcomes, Valuation, and Recommendations (as stated in the GN)
- Recommendation: all transactions related to tax amnesties should follow the accruals principle. Recording only when cash payments are recorded is permissible only in absence of other data to make accruals adjustments. Any adjustments should be consistent over time and between flows and positions.
- Valuation of assets:
  - For assets to be presented at market value following BPM6 (e.g., equity and debt securities), declared-asset data should be at market value.
  - Tax authorities may use other valuation approaches (historical or book values) to determine fines/penalties, which may differ significantly from market value at the time of amnesty.
  - Some declared assets may be assessed at nominal value (e.g., deposits), but compilers should identify valuation adjustments into the IIP based on analysis.
  - If compilers have no information on whether declared assets are at market value, assets should be considered by default at market value.
- The GN recommends inclusion of an analytical Box in BPM7 and examples from Annex II–V (or simplified versions) in the BPM7 Compilation Guide to provide additional guidance on recording under different data-availability scenarios.
- Final thoughts:
  - The GN’s recommendations aim to standardize methodological treatment of external assets and related income declared under tax amnesties across ESS and other statistical domains (GFS and National Accounts).
  - Broader recommendations could include recording of recovered assets in ESS and related assets/income adjustments based on other tax and/or mirror data sources.
  - The BPTT considers adding methodological recommendations into the Balance of Payments Manual update to promote standardization; one BPTT member preferred recording amounts only when the tax amnesty takes place (no historical revisions).

### Key statistics and country examples (excerpted from Annex I)
- Chile:
  - Chile tax reform act (2014) allowed declaration of investments abroad by residents until June 30, 2016.
  - Of the total declared assets of around US$18 billion, 85.2% classified as shares, 12.7% as deposits, and remaining as debt instruments (securities and loans).
  - The central bank adjusted the IIP in 2015 and smoothened impact by implementing revisions back to 2003; final adjustment carried out through other changes in financial assets and liabilities account.
- Spain:
  - Spain implemented a tax amnesty in 2012; repatriation of declared foreign assets was allowed by paying a 10 percent tax.
  - The central bank already had estimates of external assets declared as part of the amnesty based on mirror data; therefore no relevant back-data adjustments were made.
- Turkey:
  - Several tax amnesties encouraged transfer of assets held abroad to Turkey; applicants declared assets to banks and investment companies in Turkey.
  - Locational Banking Statistics (LBS) compiled by the BIS have been used as a data source for resident non-bank sector’s deposit holdings abroad for BOP and IIP since 2008.
  - Central Bank of the Republic of Turkey observed relatively higher amounts of inflows in residents’ deposits during tax amnesties, and signaled that net errors and omissions in related periods might stem from deposits in countries not covered by BIS data.
- Russia:
  - Russia implemented tax/capital amnesty programs ending 2016, 2018–19, and 2019–20.
  - The Bank of Russia validates remittances and transfers to foreign accounts using BIS data, CDIS, and ITRS; reporting forms under exchange control regulation are a primary source.
  - Given data sources and cooperation with Federal Tax Service, the first stage of capital amnesty made almost no influence on ESS; CBR does not distinguish inward flows connected with amnesty from other flows.

### Italy — Derived from a tax: Summary of event and statistical revisions
- A tax amnesty in Italy led to revisions to external sector statistics (ESS) published in May 2016 in the Bank of Italy’s Statistical Database and in Supplements to the Compilers.
- Time series were revised for 2009 to 2015 and then also for 1999–2009; the new figures were uploaded to the statistical database on 30 September 2016.
- Data collected exclusively by the Italian Revenue Agency were incomplete for compiling foreign sector statistics because the scheme did not grant taxpayer anonymity and did not envisage mediation by financial intermediaries.

### Italy — Treatment and estimation methods applied by the Bank of Italy
- Non-financial external assets (personal property, jewelry, paintings, etc.) and claims on residents (e.g., euro banknotes) declared under the amnesty were estimated and excluded from balance of payments and IIP figures using the share of these assets in the total computed on the basis of data for the 2009–10 tax shield:
  - about 15 per cent
- Other financial assets declared under the scheme were allocated by instrument type based on the average breakdown in the 2001–03 and 2009–10 tax shields.
- Geographical breakdown criteria varied depending on the financial instrument and data availability.
- The breakdown-by-instrument and by-country criteria were applied to the stock at end-December 2009 (the first Revenue Agency figure available) declared in the scheme.
- Statistics for the subsequent period were revised using:
  - information on total investments collected from the scheme;
  - estimated flows of each financial instrument using the same distribution as for the stock;
  - valuation adjustments using coefficients drawn from IIP data for the household sector.
- Combining the end-2009 stock, the estimated flows, and the value adjustments produced the series of stocks up to December 2015.

### Italy — Worked example of adjustments (Annexes II–V)
- Initial information (USD millions):
  - Equity stock declared under the tax amnesty in period t: 15,000
  - Initial Stock in t: 117,047
  - Total Stock (including adjustment) in t: 132,047
  - % adjustment a)/b): 12.82%
- Adjustment of historical stocks and flows (selected results, millions of USD):
  - Adjusted closing IIP positions:
    - t-3: 113,960
    - t-2: 118,484
    - t-1: 124,159
    - t: 132,047
- Adjustment methodology summary:
  - 1) Adjustment of stocks: initial stocks multiplied by the % adjustment (12.82%).
  - 2) Adjustment of other flows: apply the ratios of price changes (OPC and ERC) over the initial stocks to the adjusted stocks; OCV (other changes in volume) obtained as residual.
  - 3) All values are adjusted except BOP transactions (in one variant) or all values including BOP transactions (in another variant), and OCV are obtained as residual depending on the chosen procedure in Annex II versus Annex III.
- Numerical examples of adjusted components (millions of USD):
  - Assets. Portfolio Investment. Equity (Adjusted Values):
    - t-3 opening IIP: 112,815; BOP Transactions: 1,000; Other price Changes (OPC) adjusted: 11.28; Exchange Rate Changes (ERC) adjusted: -5.64; OCV: 139; closing IIP: 113,960
    - t-2 opening IIP: 113,960; BOP Transactions: 4,000; OPC adjusted: 5.64; ERC adjusted: 5.64; OCV: 513; closing IIP: 118,484
    - t-1 opening IIP: 118,484; BOP Transactions: 5,000; OPC adjusted: 9.03; ERC adjusted: 7.90; OCV: 658; closing IIP: 124,159
    - t opening IIP: 124,159; BOP Transactions: 7,000; OPC adjusted: -3.38; ERC adjusted: -5.64; OCV: 897; closing IIP: 132,047

### Italy — Adjustment to the income account (Annex V)
- Initial information (USD millions):
  - Income on Portfolio Investment equity declared under the tax amnesty in period t: 170
- Initial income on PI equity (credits) and IIP (t-4 to t):
  - a) Income on PI equity (credits). Initial values: t-4 1,939; t-3 1,090; t-2 2,316; t-1 2,762; t 2,705; Total 10,812
  - b) IIP: t-4 100,000; t-3 101,015; t-2 105,025; t-1 110,055; t 117,047
  - Ratio of Income to IIP (a/b): t-4 1.94%; t-3 1.08%; t-2 2.21%; t-1 2.51%; t 2.31%
- Allocation of the additional income 170 across periods:
  - % of income by period (a)/total: t-4 18%; t-3 10%; t-2 21%; t-1 26%; t 25%
  - New income allocated to each period (170 * c): t-4 30; t-3 17; t-2 36; t-1 43; t 43
- Adjusted income on PI equity (credits) a + d:
  - t-4: 1,969
  - t-3: 1,107
  - t-2: 2,352
  - t-1: 2,805
  - t: 2,748
- Adjusted ratios of Income to IIP after allocation:
  - t-4 1.97%; t-3 1.10%; t-2 2.24%; t-1 2.55%; t 2.35%

### Key implications for external sector statistics
- The Bank of Italy applied explicit estimation procedures to:
  - remove non-financial assets and claims on residents from declared amounts (about 15 per cent of declared totals based on 2009–10 tax shield data);
  - allocate remaining declared amounts by instrument and geography using historical tax shield breakdowns;
  - estimate flows for each instrument using the same distribution as stocks and apply valuation adjustments based on household-sector IIP coefficients.
- The example demonstrates that an amnesty declaration of 15,000 (equity) against an initial stock of 117,047 implies a % adjustment of 12.82%, with consequent adjustments to historical opening and closing IIP positions, price and exchange-rate components, OCV residuals, and income allocations.

*Guidance Note prepared by Nadim Ahmad (OECD), Emma Angulo, Venkat Josyula, and Antonio Galicia (IMF) (BPTT). Bank of Italy Statistical Database and Supplements to the Compilers.*

### SECTION I: THE ISSUE

### B9: Treatment of External Assets and Related Income Declared Under Tax Amnesty — SECTION I: THE ISSUE

### Background
- The Guidance Note (GN) states that many countries have implemented tax amnesties on external assets and related income in recent years, prompting compilers to seek guidance on treatment in external sector statistics (ESS).
- As per publicly available information cited in the GN, around twenty countries have implemented one or more tax amnesty schemes during the last two decades.
- The GN notes that explicit guidance on treatment of external assets and related income declared under tax amnesties is not available in macroeconomic statistics manuals, including BPM6; GFSM 2014 contains limited references on timing and measurement of tax revenue from tax amnesties.
- Definition: the GN describes a tax amnesty as a limited-time opportunity for a specified group of taxpayers to report undeclared income and assets relating to earlier tax periods and pay a defined amount in exchange for forgiveness of tax liability, without fear of criminal prosecution.
- Typical scope: schemes often cover undisclosed domestic and external assets (currency and deposits, equity and investment funds shares, debt securities, gold, real estate, etc.) of residents and associated income (interest, dividends, rental).
- Motives: governments use tax amnesties to repatriate undeclared external assets, collect revenue from accrued-but-unpaid taxes, speed up tax payments, and capture revenue from previously undisclosed transactions or events.
- Country practices differ; Annex I summarizes approaches and shows three broad categories currently applied in ESS:
  - The tax amnesty does not imply any change in ESS: declared assets/income are already incorporated in current estimates (e.g., via mirror data) or are insignificant.
  - Declared assets/income recorded only in the current period: incorporations are made only in the period of declaration without backward adjustments; income recorded only for amount accrued in current period.
  - Declared assets/income recorded in current and previous periods: incorporations made in period of declaration with adjustments carried backward to record assets and income in their accrual periods.

### Treatment in GFSM 2014 (as cited by the GN)
- GFSM 2014 distinguishes two broad types of amnesties:
  - Payment of taxes on undeclared income/domestic assets (where tax authorities lacked prior information).
  - Payment of taxes on undeclared income/external assets (where tax authorities lacked prior information).
- GFSM 2014 follows accrual recording: any adjustment to taxes due to under/overestimation should be implemented in the period in which the under/overestimation occurred; if time cannot be identified, adjustment is recorded when the need for adjustment is identified (paragraphs 5.19 and 5.20, GFSM 2014).

### Issues for Discussion — Practical Scenarios for Compilers (as outlined by the GN)
- Two practical scenarios for compilers:
  - Declared assets/income already estimated from other sources:
    - If declared assets have been already estimated in the balance of payments and IIP, compilers should assess accuracy of current estimates versus new information; if appropriately included, the new data serve as cross-checks; if differences arise, adjustments should be made.
  - Declared assets/income not incorporated in current estimates earlier:
    - If not estimated and considered significant or if differences are significant, adjustments should be undertaken in ESS to record corresponding instruments.
    - Adjustments should ideally be implemented as transactions in the relevant periods, ensuring consistency between income and asset adjustments.

### Practical Guidance for Adjustments (as recommended in the GN)
- External assets:
  - If timing of original transactions can be accessed or estimated, adjustments should be made to the relevant data categories in the corresponding periods.
  - If timing is not known, compilers should allocate assets and income declared to back periods based on approaches discussed in the GN; the number of periods for allocation should be decided in consultation with tax authorities and relevant government agencies.
  - Two options for adjusting the IIP and other flows (Annex references):
    - Adjustment option A: Adjustment to stocks homogeneously over the years by smoothening stocks applying the growth percentage in year t going backwards; changes to revaluations based on their weight over the stocks for each period; changes to other changes in volume of assets (OCVA) obtained as residual; balance of payments transactions are not adjusted. (See Annex II.)
    - Adjustment option B (preferred in the GN): Adjustment to the balance of payments, the IIP, and other flows: adjustment to stocks homogeneously over the years by smoothening stocks applying the growth percentage in year t going backwards; changes to transactions and revaluations based on their weight over the stocks for each period; OCVA obtained as residual. (See Annex III.)
  - Adjustments to current period estimates only: adoptable only when historical adjustments are not possible; involves recording declared external assets in the IIP in the corresponding instrument through “other flows” account (example in Annex IV). The GN suggests reviewing the definition of OCVA (paragraph 9.7 of BPM6) to include “transactions corresponding to previous periods raised from tax amnesties.” Metadata should clearly explain reasons for jumps in IIP assets in tax amnesty periods.
- Income:
  - Income declared under tax amnesty should follow the accrual principle; compilers need to identify periods when declared income was accrued.
  - The GN provides a simple approach for income adjustments (see Annex V).

### Outcomes, Valuation, and Recommendations (as stated in the GN)
- Recommendation: all transactions related to tax amnesties should follow the accruals principle. Recording only when cash payments are recorded is permissible only in absence of other data to make accruals adjustments. Any adjustments should be consistent over time and between flows and positions.
- Valuation of assets:
  - For assets to be presented at market value following BPM6 (e.g., equity and debt securities), declared-asset data should be at market value.
  - Tax authorities may use other valuation approaches (historical or book values) to determine fines/penalties, which may differ significantly from market value at the time of amnesty.
  - Some declared assets may be assessed at nominal value (e.g., deposits), but compilers should identify valuation adjustments into the IIP based on analysis.
  - If compilers have no information on whether declared assets are at market value, assets should be considered by default at market value.
- The GN recommends inclusion of an analytical Box in BPM7 and examples from Annex II–V (or simplified versions) in the BPM7 Compilation Guide to provide additional guidance on recording under different data-availability scenarios.
- Final thoughts:
  - The GN’s recommendations aim to standardize methodological treatment of external assets and related income declared under tax amnesties across ESS and other statistical domains (GFS and National Accounts).
  - Broader recommendations could include recording of recovered assets in ESS and related assets/income adjustments based on other tax and/or mirror data sources.
  - The BPTT considers adding methodological recommendations into the Balance of Payments Manual update to promote standardization; one BPTT member preferred recording amounts only when the tax amnesty takes place (no historical revisions).

### Key statistics and country examples (excerpted from Annex I)
- Chile:
  - Chile tax reform act (2014) allowed declaration of investments abroad by residents until June 30, 2016.
  - Of the total declared assets of around US$18 billion, 85.2% classified as shares, 12.7% as deposits, and remaining as debt instruments (securities and loans).
  - The central bank adjusted the IIP in 2015 and smoothened impact by implementing revisions back to 2003; final adjustment carried out through other changes in financial assets and liabilities account.
- Spain:
  - Spain implemented a tax amnesty in 2012; repatriation of declared foreign assets was allowed by paying a 10 percent tax.
  - The central bank already had estimates of external assets declared as part of the amnesty based on mirror data; therefore no relevant back-data adjustments were made.
- Turkey:
  - Several tax amnesties encouraged transfer of assets held abroad to Turkey; applicants declared assets to banks and investment companies in Turkey.
  - Locational Banking Statistics (LBS) compiled by the BIS have been used as a data source for resident non-bank sector’s deposit holdings abroad for BOP and IIP since 2008.
  - Central Bank of the Republic of Turkey observed relatively higher amounts of inflows in residents’ deposits during tax amnesties, and signaled that net errors and omissions in related periods might stem from deposits in countries not covered by BIS data.
- Russia:
  - Russia implemented tax/capital amnesty programs ending 2016, 2018–19, and 2019–20.
  - The Bank of Russia validates remittances and transfers to foreign accounts using BIS data, CDIS, and ITRS; reporting forms under exchange control regulation are a primary source.
  - Given data sources and cooperation with Federal Tax Service, the first stage of capital amnesty made almost no influence on ESS; CBR does not distinguish inward flows connected with amnesty from other flows.

*Guidance Note prepared by Nadim Ahmad (OECD), Emma Angulo, Venkat Josyula, and Antonio Galicia (IMF) on treatment of external assets and related income declared under tax amnesties (BPTT).*

### 5. Italy Derived from a tax

### 5. Italy Derived from a tax

### Summary of event and statistical revisions
- A tax amnesty in Italy led to revisions to external sector statistics (ESS) published in May 2016 in the Bank of Italy’s Statistical Database and in Supplements to the Compilers.
- Time series were revised for 2009 to 2015 and then also for 1999–2009; the new figures were uploaded to the statistical database on 30 September 2016.
- Data collected exclusively by the Italian Revenue Agency were incomplete for compiling foreign sector statistics because the scheme did not grant taxpayer anonymity and did not envisage mediation by financial intermediaries.

### Treatment and estimation methods applied by the Bank of Italy
- Non-financial external assets (personal property, jewelry, paintings, etc.) and claims on residents (e.g., euro banknotes) declared under the amnesty were estimated and excluded from balance of payments and IIP figures using the share of these assets in the total computed on the basis of data for the 2009–10 tax shield:
  - about 15 per cent
- Other financial assets declared under the scheme were allocated by instrument type based on the average breakdown in the 2001–03 and 2009–10 tax shields.
- Geographical breakdown criteria varied depending on the financial instrument and data availability.
- The breakdown-by-instrument and by-country criteria were applied to the stock at end-December 2009 (the first Revenue Agency figure available) declared in the scheme.
- Statistics for the subsequent period were revised using:
  - information on total investments collected from the scheme;
  - estimated flows of each financial instrument using the same distribution as for the stock;
  - valuation adjustments using coefficients drawn from IIP data for the household sector.
- Combining the end-2009 stock, the estimated flows, and the value adjustments produced the series of stocks up to December 2015.

### Worked example of adjustments (Annexes II–V)
- Initial information (USD millions):
  - Equity stock declared under the tax amnesty in period t: 15,000
  - Initial Stock in t: 117,047
  - Total Stock (including adjustment) in t: 132,047
  - % adjustment a)/b): 12.82%
- Adjustment of historical stocks and flows (selected results, millions of USD):
  - Adjusted closing IIP positions:
    - t-3: 113,960
    - t-2: 118,484
    - t-1: 124,159
    - t: 132,047
- Adjustment methodology summary:
  - 1) Adjustment of stocks: initial stocks multiplied by the % adjustment (12.82%).
  - 2) Adjustment of other flows: apply the ratios of price changes (OPC and ERC) over the initial stocks to the adjusted stocks; OCV (other changes in volume) obtained as residual.
  - 3) All values are adjusted except BOP transactions (in one variant) or all values including BOP transactions (in another variant), and OCV are obtained as residual depending on the chosen procedure in Annex II versus Annex III.
- Numerical examples of adjusted components (millions of USD):
  - Assets. Portfolio Investment. Equity (Adjusted Values):
    - t-3 opening IIP: 112,815; BOP Transactions: 1,000; Other price Changes (OPC) adjusted: 11.28; Exchange Rate Changes (ERC) adjusted: -5.64; OCV: 139; closing IIP: 113,960
    - t-2 opening IIP: 113,960; BOP Transactions: 4,000; OPC adjusted: 5.64; ERC adjusted: 5.64; OCV: 513; closing IIP: 118,484
    - t-1 opening IIP: 118,484; BOP Transactions: 5,000; OPC adjusted: 9.03; ERC adjusted: 7.90; OCV: 658; closing IIP: 124,159
    - t opening IIP: 124,159; BOP Transactions: 7,000; OPC adjusted: -3.38; ERC adjusted: -5.64; OCV: 897; closing IIP: 132,047

### Adjustment to the income account (Annex V)
- Initial information (USD millions):
  - Income on Portfolio Investment equity declared under the tax amnesty in period t: 170
- Initial income on PI equity (credits) and IIP (t-4 to t):
  - a) Income on PI equity (credits). Initial values: t-4 1,939; t-3 1,090; t-2 2,316; t-1 2,762; t 2,705; Total 10,812
  - b) IIP: t-4 100,000; t-3 101,015; t-2 105,025; t-1 110,055; t 117,047
  - Ratio of Income to IIP (a/b): t-4 1.94%; t-3 1.08%; t-2 2.21%; t-1 2.51%; t 2.31%
- Allocation of the additional income 170 across periods:
  - % of income by period (a)/total: t-4 18%; t-3 10%; t-2 21%; t-1 26%; t 25%
  - New income allocated to each period (170 * c): t-4 30; t-3 17; t-2 36; t-1 43; t 43
- Adjusted income on PI equity (credits) a + d:
  - t-4: 1,969
  - t-3: 1,107
  - t-2: 2,352
  - t-1: 2,805
  - t: 2,748
- Adjusted ratios of Income to IIP after allocation:
  - t-4 1.97%; t-3 1.10%; t-2 2.24%; t-1 2.55%; t 2.35%

### Key implications for external sector statistics
- The Bank of Italy applied explicit estimation procedures to:
  - remove non-financial assets and claims on residents from declared amounts (about 15 per cent of declared totals based on 2009–10 tax shield data);
  - allocate remaining declared amounts by instrument and geography using historical tax shield breakdowns;
  - estimate flows for each instrument using the same distribution as stocks and apply valuation adjustments based on household-sector IIP coefficients.
- The example demonstrates that an amnesty declaration of 15,000 (equity) against an initial stock of 117,047 implies a % adjustment of 12.82%, with consequent adjustments to historical opening and closing IIP positions, price and exchange-rate components, OCV residuals, and income allocations.

---


_Source: https://www.imf.org/-/media/files/data/statistics/bpm6/bptt/b9-treatment-of-external-assets-and-relatedincome-declared-under-tax-amnesty-in-external-sector-stat.pdf_