National Income Accounting in Iceland

One account notes:

gross national income per capita is still down by a quarter since 2007

But Dean Baker checks with the IMF and notes:

per capital GDP in Iceland is around 2.0 percent higher now than its pre-recession peak. That is a very different story. In fairness, the NYT piece refers to gross national income (GNI), not gross domestic product.

Dean argues that GDP is preferred over GNI but why if the citizens of a nation enjoy significant net income from abroad. Dean adds:

GDP is usually the preferred measure, but it can be inflated by things like foreign companies claiming profits in the country for tax purposes, as happens in Ireland. If the NYT's GNI numbers are correct, it is most likely due to foreign profits of Iceland's major banks in the bubble years before the crisis. It's not clear that the loss of these profits, which were based on speculation and fraud, is a negative for Iceland's economy.

Actually this represents two stories. Is it the bank speculation tale only? Or how much of this difference is due to transfer pricing manipulation? Ireland is known for its tax haven status with lots of multinationals shifting income there, which is why its reported GDP in 2013 on a PPP basis was almost 30% greater than its reported GNP in 2013 on the same basis. Iceland’s reported GDP in 2013 on a PPP basis was 15% higher than its reported GNP in 2013 on the same basis. While there is not much discussion of Iceland being a tax haven or transfer pricing with respect to this nation, it is interesting that its corporate tax rate is only 20%.