Cozen O’Conner –
The BEA conducts a number of surveys to collect data on foreign direct investment in the United States. Reporting to the BEA is mandatory. Any data collected is confidential, and the reporting entity’s prior permission is required before the BEA can release it in any form that would allow the data of an individual reporting entity to be identified. Failure to participate in any mandatory survey may subject the entity and its directors, officers, and employees to civil and criminal liability.
The benchmark survey Form BE-12 is used to produce statistics on the scale and effect of foreign investment in the United States. The current BE-12 survey covers the filer’s fiscal year ending in 2017. Responses are due by May 31, 2018 (June 30, 2018, if the survey is filed using the BEA’s eFile system). Any U.S. entity subject to the reporting requirements of the BE-12 must submit the report, regardless of whether the BEA contacted the U.S. entity to request participation in the survey.
Entities Subject to Reporting Requirements
The BE-12 has to be filed by each U.S. entity in which a foreign person owns or controls, directly or indirectly, 10 percent or more of the voting securities (or an equivalent interest in an unincorporated U.S. enterprise) on December 31, 2017. The rules provide for certain exemptions for private funds that report through the Treasury International Capital reporting system of the U.S. Department of the Treasury.
Forms to be Filed
Which of the various BE-12 forms needs to be filed depends on the size of the foreign investment as well as the financial data of the U.S. entity in question.
This form must be completed if:
- The U.S. entity is majority-owned by one or more foreign parents (i.e., the combined direct and indirect ownership interests of all foreign parents exceed 50 percent); and
- For the filer’s fiscal year ended in 2017, any of the following items, on a fully consolidated basis (or, in the case of real estate investment, on an aggregated basis) was greater than $300 million (positive or negative):
- Total gross assets,
- Sales or gross operating revenues, excluding sales taxes, or
- Net income after provision for U.S. income taxes.
This form must be completed:
- By a majority-owned U.S. entity if on a fully consolidated basis (or, in the case of real estate investment, on an aggregated basis), any of the above was greater than $60 million (positive or negative), but less than $300 million (positive or negative) for the fiscal year ended in 2017, or
- By a minority-owned U.S. entity (i.e., the combined direct and indirect ownership interests of all foreign parents amount to 50 percent or less, but at least 10 percent) if any of the three items was greater than $60 million (positive or negative) for the fiscal year ended in 2017.
This form must be completed by majority- or minority-owned U.S. entities if on a fully consolidated basis (or, in the case of real estate investment, on an aggregated basis), any of the three items was less than $60 million (positive or negative).
Form BE-12 Claim for Not Filing
This form is filed if the BEA contacted the entity regarding its reporting status, but the entity is not required to file a Form BE-12 because the foreign voting ownership interest (or the equivalent) in the U.S. entity amounts to less than 10 percent.
Information To Be Provided
Each of Forms BE-12A, 12B, and 12C are divided into three parts:
- Part I requests general information on the organizational structure of the U.S. entity and its foreign ownership.
- Part II asks for additional financial and operational data of the U.S. entity. The financial information in the least extensive survey, Form BE-12C, is limited to five questions, but the most extensive survey, Form BE-12A, asks for detailed financial information on the U.S. entity and its consolidated U.S. affiliates, including export and import of goods by country of origin as well as employment and property, plan, and equipment of the U.S. affiliates by U.S. state.
- Part III requires the filer to provide information on its foreign owner(s) and a list of all U.S. entities that are fully consolidated into the report of the filer. This part of Forms BE-12A and 12B includes detailed questions about investment and transactions between the filer and its foreign affiliates.
The survey requires extensive financial and operational information, making it imperative for companies to quickly determine if they are required to report and, if so, begin preparing their response.
Compliments of Cozen O’Connor – a member of the EACC in New York