Manual on Statistics of International Trade in Services

2. Valuation of transactions 
3.16.  Market price should be used as the basis for 
valuation of transactions in international trade in 
services. Thus, transactions will generally be valued at 
the actual price agreed on by the supplier and the 
consumer. BPM5 identifies some of the more common 
circumstances under which it may not be possible to 
establish a market price and recommends that in such 
circumstances it is appropriate to develop a proxy 
measure, if possible by analogy with known market 
                                                 
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 Because embassies and consulates are considered 
extraterritorial to the economies in which they are located, the 
compensation received by host country (local) staff is 
classified as payments of income to residents by non-
residents. 
prices established under conditions that are considered 
essentially the same as those pertaining to the unpriced 
transaction.  
3.17. Particular problems may arise in valuing 
international transactions between related
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 enterprises 
integrated under the same management but situated in 
different economies. Transactions may not be market 
transactions because there is a lack of independence 
among the parties to the exchange, and the prices used in 
portraying such transactions in the books of the 
enterprises (called transfer prices) may or may not be 
market prices. Transfer pricing that is not based closely 
on market considerations could be expected to be 
common among related enterprises conducting business 
across national boundaries, because disparities between 
taxes and regulations imposed by different governments 
are a factor in management decisions on the optimum 
allocation of profits among units.
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3.18. The  present  Manual follows BPM5 by 
recommending that, where distortions between market 
and transfer prices are large, replacement of book values 
with market value equivalents is desirable in principle, 
although in practice such prices may be difficult to 
estimate. In view of the practical difficulties involved in 
substituting an imputed or notional market value for an 
actual transfer value, substitution should be the 
exception rather than the rule. However, if certain 
transfer prices are so divorced from those of similar 
transactions that the transfer prices significantly distort 
measurement, the prices should either be replaced by 
market price equivalents or be separately identified for 
analytical purposes.