Mandatory Reporting for U.S. Entities in 2018 Regarding Foreign Direct Investment
December 4, 2017
In early 2018, the U.S. Department of Commerce's Bureau of Economic Analysis (BEA) will issue its mandatory five-year benchmark survey to obtain data on foreign direct investment (FDI) in the United States. The survey, known as the BE-12 survey, is required for U.S. entities in which a foreign entity or person holds, directly or indirectly, 10 percent of more of the U.S. entity's voting interests at any time during 2017. The completed surveys are due to the BEA on or before May 31, 2018, and covered entities must file regardless of whether the entity is contacted by the BEA. While the BE-12 is a five-year benchmark survey, the reporting period is one year. For the upcoming BE-12 survey, the period is an entity's fiscal year ending in 2017. Further, the BEA is issuing new BE-12 surveys and expects to issue the new forms in January 2018.
The information required by the BE-12 surveys includes identification of foreign parents, major products and/or services provided by the U.S. business, sales or gross operating revenues, balance sheet information, income and employment information, as well as financial and operating data for the U.S. business. There will be four options for the survey: the BE-12A; BE-12B; BE-12C; and the BE-12 Claim for Not Filing. The specific form that a U.S. entity must file will be determined by the size of the U.S. business and amount of foreign ownership. A U.S. business may submit a BE-12 Claim for Not Filing if: (i) the foreign ownership has fallen below 10 percent in 2017; (ii) the entity has been fully consolidated or merged into another U.S. business; or (iii) the entity has been liquidated or dissolved. Also, while the surveys and the regulations relating to the BE-12 are not yet finalized, the BEA has proposed an exemption from the reporting for certain private funds. The proposed exemption would generally cover a U.S. private fund that does not own, directly or indirectly, an operating company and no U.S. operating company exists between the foreign investor and the U.S. private fund. Also, the BE-12 should be completed on a consolidated basis, with a single submission for all U.S. businesses sharing common ownership.
The BEA may impose civil and/or criminal penalties for failure to submit the BE-12 survey. The BEA surveys are confidential and may be used only for statistical and analytical purposes.
If you have a question regarding the BEA reporting obligations, please contact Josephine Aiello LeBeau (firstname.lastname@example.org); Daniel Glazer (Daniel.Glazer@wsgr.com); Melissa Mannino (email@example.com); or Anne Seymour (firstname.lastname@example.org). Wilson Sonsini Goodrich & Rosati will continue to keep you informed of further foreign direct investment developments and will issue another WSGR Alert once the BE-12 surveys are available.