On 2 March 2022 the IMF announced the release of a new database on special purpose entities (SPEs) showing cross-border flows and positions of SPEs and based on an internationally agreed definition of SPEs.
The release of the database follows recommendations made by the Task Force on Special Purpose Entities (TFSPE), set up by the IMF’s Committee on Balance of Payments Statistics in 2016. A report by the TFSPE in 2018 proposed an international definition of SPEs to facilitate the compiling of cross-border statistics and a data collection framework for comparable international data on SPEs.
The database Includes information permitting the separate identification of SPEs within the statistics of participating countries. There is currently data from 25 countries, including a number of offshore centres, and more countries are to be added in the near future. The database includes the annual data for 2020 for all the participating countries, and historical or quarterly data for 2021 for some countries.
The need for the database is a result of the increasing use of SPE structures by multinational enterprises looking for benefits from different legal and tax regimes. The SPEs are not just financial vehicles but have expanded their scope to include tax-related strategies involving trading as well as investment activities. SPEs can serve as royalty companies but can also provide other services such as operational leasing, re-invoicing, or even trade in goods.
This has led to the development of “Near-SPEs” or “SPE type” entities which are hybrid companies performing both traditional SPE activities (such as financial intermediation) and non-SPE activities. The growth of these near-SPEs has developed from the need to employ more staff following the OECD’s reports on base erosion and profit shifting (BEPS), to demonstrate economic substance. The BEPS action plan addressed tax avoidance strategies that exploit tax gaps and mismatches to move profits to low-tax locations even though the group might have little economic activity there.
As the size of SPE-related financial flows across borders may interfere with the interpretation of macroeconomic statistics, the users of statistics require separate information on SPE activities. Separate identification of SPE activities is important for market analysts and policy makers in analysing cross-border activities and the associated risks.
The report issued by the TFSPE in 2018 proposed an international definition of SPEs and a data collection framework for comparable cross-border SPE data. An inventory of different types of SPEs was therefore compiled. In its definition of an SPE the TFSPE determined that “an SPE, resident in an economy, is a formally registered and/or incorporated legal entity recognized as an institutional unit, with no or little employment up to a maximum of five employees, no or little physical presence and no or little physical production in the host
