Mandatory BE-12 Benchmark Survey of Foreign Direct Investment in the U.S. Due May 31, 2018

May 07, 2018

By Scott M. Flicker & Randall V. Johnston

The mandatory BE-12 Benchmark Survey of Foreign Direct Investment in the United States is due May 31, 2018. Unlike the standard annual Bureau of Economic Analysis (“BEA”) surveys (the BE-11 and the BE-15), the BE-12 is conducted every five years and is mandatory for companies subject to the reporting requirements even if they are not notified by the BEA.

I. BEA Background

The little-known BEA, within the U.S. Department of Commerce, prepares official U.S. economic statistics for the U.S. Government. The BEA relies on information collected from its surveys of U.S. direct investment abroad and foreign direct investment in the United States.

The BEA conducts several surveys that require transaction-related, quarterly, annual, and benchmark filings. Benchmark surveys, such as the BE-12, are conducted every five years and, unlike the quarterly and annual versions, are mandatory regardless of whether the company is notified by the BEA.

II. BE-12 Summary

The BE-12 benchmark survey is the BEA’s most comprehensive survey of foreign direct investment in the United States. The BE-12 due this year covers information from the 2017 fiscal year.

The BE-12 covers U.S. businesses in which foreign persons or entities hold direct and/or indirect voting ownership interest (or the equivalent) of 10 percent or more. The first foreign person or entity up the ownership chain of a U.S. business is considered the “foreign parent” for BEA purposes. U.S. businesses covered by the BE-12 survey include improved and unimproved real estate (except residential real estate held exclusively for personal use), but do not include private funds[1] if (1) the private fund does not own, directly or indirectly, an operating company in which the foreign parent owns at least 10% of the voting interest; and (2) if the private fund is owned indirectly, there are no operating companies in the ownership chain between the foreign parent and the private fund.

U.S. businesses that would normally file the BE-15 annual survey file the BE-12 benchmark survey when it is conducted instead.

III. Which BE-12 Form to File

There are four forms the BE-12 takes, depending on the size of the U.S. business’s total assets, sales or gross operating revenues, or net income (positive or negative).

A. Form BE-12A

The Form BE-12A is required of U.S. businesses that are:

More than 50 percent owned, directly or indirectly, by foreign persons or entities; and
Have total assets, sales or gross operating revenues, or net income of more than $300 million (positive or negative).

B. Form BE-12B

The Form BE-12B is required of U.S. businesses that are:

Either:
– More than 50 percent owned, directly or indirectly, by foreign persons or entities; and
– Have total assets, sales or gross operating revenues, or net income of more than $60 million (positive or negative), but none of which exceed $300 million (positive or negative).
Or:

– Owned at least 10 percent, but not more than 50 percent, by foreign persons or entities; and
– Have total assets, sales or gross operating revenues, or net income of more than $60 million (positive or negative).

C. Form BE-12C

The Form BE-12C is required of U.S. businesses that are:

Owned at least 10 percent, directly or indirectly, by foreign persons or entities; and
Have total assets, sales or gross operating revenues, or net income of less than $60 million (positive or negative).[2]

D. Form BE-12 Claim for Not Filing

The Form BE-12 Claim for Not Filing is filed if a U.S. business does not meet the requirements for filing the forms BE-12A, BE-12B, or BE-12C, but was notified by the BEA to file the BE-12 survey.

IV. When to File

The BE-12 is due May 31, 2018 (or by June 30, 2018, for reporting companies that use the BEA’s eFile system). The BEA may grant an extension for a company filing the BE-12A, BE-12B, or BE-12C if that request is received by May 31, 2018.

V. Confidentiality

By federal statute, reports to the BEA are confidential and are used only for analytical and statistical purposes.[3] Unless the submitting business gives its prior written consent, the BEA must not present information contained in a report in a manner that allows it to be individually identified. Further, these reports cannot be used for purposes of taxation, investigation, or regulation.

VI. Penalties

Failure to supply the information required in the BE-12 carries both civil and criminal penalties. Specifically, a person who fails to file may face civil penalties of between $4,619 and $46,192 and BEA is authorized to seek injunctive relief compelling a response. Willful violations can carry criminal penalties of up to $10,000 and, for individuals, imprisonment of up to one year, or both.[4]

We are available to assist our clients with interpreting the filing requirements or completing a filing, if required.

[1] “Private fund” in the BEA context refers to the same class of financial entities that must report to the Securities and Exchange Commission as private funds on Form PF.

[2] Note that for U.S. businesses with less than $20 million (positive or negative) of total assets, sales or gross operating revenues, or net income, only select data from the BE-12C is required.

[3] 22 U.S.C. § 3104(c); see also 15 C.F.R. § 801.5.

[4] 22 U.S.C. § 3105.

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