Unlike most OECD databases, which rely on government data provided at country-level, the OECD MAGIC database uses firm-level data. The subsidy estimates included in the database are based on raw data obtained from firms’ annual reports, financial statements, bond prospectuses, IPO prospectuses, etc. The data are collected and verified manually by the OECD to maximise accuracy, consistency, and comparability. In some cases, additional information is also obtained from government databases, either to verify the firm-level information or to complement it. Care is taken to avoid double-counting where the data mix corporate and government sources.
Across the three types of subsidy instruments currently covered by the OECD MAGIC database – government grants, corporate income tax concessions, and below-market borrowings – data collection varies. Data for grants and tax concessions are based mainly on the amounts directly reported by companies although estimates for tax concessions involve some degree of interpretation, judgment, and estimation by the OECD. Data for below-market borrowings are estimated by the OECD using raw data obtained from companies on the structure of their debt, the interest rates they face, and their credit ratings. Calculations for below-market borrowings then involve comparing actual interest rates that firms are charged on their borrowings against hypothetical benchmark interest rates that would normally prevail in the market based on borrowers’ financial profile.
These estimates reflect the OECD’s best assessment of the value of the subsidies received by the largest manufacturers globally. They are, however, conservative both in terms of the choices and assumptions made (e.g. when calculating below-market borrowings) and in terms of the range of subsidy instruments covered. Other types of subsidies exist beyond those currently covered in the OECD MAGIC database, such as below-market equity and the provision of intermediate inputs, energy, and land to companies at below-market prices. Work is already underway to add estimates of below-market equity to future versions of the database. Partial evidence also exists for some of the other types of subsidies but not on a scale that would match the coverage of the OECD MAGIC database.