Several Bureau of Economic Analysis (“BEA”) reports will be due later this month, on May 31st, including a 5-year Benchmark Survey of Foreign Direct Investment. U.S. companies with foreign affiliates should ensure their compliance departments are working to timely file any applicable reports, including filing of any appropriate claims for exemption.
These reporting requirements are promulgated under the International and Trade in Services Survey Act (22 USC 3101-3108, as amended, the “Act”). The Act authorizes the BEA to collect information from U.S. companies that have foreign subsidiaries or parents,[i] subject to certain confidentiality provisions.[ii] In some instances, companies may be exempt from the requirements to report. However, a claim for exemption must still be filed. The penalty for noncompliance with the various filing requirements could be between $2,500 and $25,000 (although the BEA may waive penalties for failing to timely file for an exemption, if a company self-reports).
Some of the reporting requirements are listed below. There are several BEA reports, and we did not attempt to list them all, nor have we explained all of the potential exemptions. If you would like an assessment for your company, please contact Nick Pearson or Amber Mills.
1. 5-year Benchmark Survey of Foreign Direct Investment in the U.S.
This report runs on a 5-year cycle which ended in 2012 and is due May 31, 2013. Unlike several of the other BEA reports, this report does not have a threshold requirement that would typically exclude smaller companies. The Act enumerates several purposes for the collection of the information in this survey including to “identify location, nature, and magnitude of, and changes in total investment by any parent in each of its affiliates and the financial transactions between [them]…,” to collect employment data, information on tax payments and to determine the amount of R&D expenditures. There is a similar 5-year survey for the collection of information related to U.S. foreign direct investment abroad. The last reporting period for this survey ended in 2009 and the next reporting period will end in 2014.
2. 2012 Annual Survey of U.S. Direct Investment Abroad
- BE-11A – Report for U.S. Reporter
- BE-11B – Report for Majority-Owned Foreign Affiliate
- BE-11C – Report for Minority-Owned Foreign Affiliate
- BE-11D – Report for Established or Acquired Foreign Affiliate(s)
- BE-11 Claim for Not Filing
Applicable reports are due May 31, 2013. A Claim for Not Filing (exemption) may be completed in lieu of filing any one of the reports if all of the foreign affiliates[iii] of the U.S. reporting entity maintain “exemption level items” that do not exceed $60 million (positive or negative). “Exemption level items” generally refers to total assets, annual sales or gross operating revenues, and net income (loss). A Claim for Not Filing needs to be filed only once, and no further reporting obligation will be due unless/until the thresholds are exceeded.
There is also an annual survey for Foreign Direct Investment in the U.S. However, because 2012 fell on the end of a 5-year reporting cycle, the benchmark survey noted under #1 can be filed in lieu of the annual survey for the current reporting year.
3. Quarterly Survey of Foreign Direct Investment.
As the name implies, this report is due every quarter. Companies who meet the exemption criteria can file a claim for exemption. A claim for exemption can be made if all of the following items are each equal to or less than $60 million (positive or negative): total assets, annual sales or gross operating revenues, and annual net income (loss). Quarterly reports are generally due within 30 days after the quarter end.
4. Quarterly Survey of Insurance Transactions by U.S. Insurance Companies with Foreign Persons.
Completion of this survey is required of any U.S. insurance company that has engaged in reinsurance transactions with foreign persons, that has earned premiums from, or incurred losses to, foreign persons in the capacity of primary insurer, or that has engaged in international sales or purchases of services auxiliary to insurance. Quarterly reports are generally due within 30 days after the quarter end. Filing is mandatory if any of the following eight items exceeded $8 million (positive or negative) for the previous calendar year or can expected to be in the current calendar year on an accrual basis:
- premiums earned on reinsurance assumed
- losses on reinsurance assumed
- premiums incurred on reinsurance ceded
- losses on reinsurance ceded
- premiums earned on primary insurance sold
- losses on primary insurance sold
- sales of auxiliary insurance services, and
- purchases of auxiliary insurance services.
[i] In particular, the purpose of the Act is:
to provide clear and unambiguous authority for the President to collect information on international investment and United States foreign trade in services, whether directly or by affiliates, including related information necessary for assessing the impact of such investment and trade, to authorize the collection and use of information on direct investments owned or controlled directly or indirectly by foreign governments or persons, and to provide analyses of such information to the Congress, the executive agencies, and the general public.
22 U.S.C. 3101(b).
[ii] With respect to confidentiality of the information provided by a reporting company, the following provisions apply:
[Information collected under the reports] shall be available only to officials or employees designated to perform functions under this chapter, including consultants and persons working on contracts awarded pursuant to this chapter. Subject to the limitation of paragraph (1) [below], the President may authorize the exchange between agencies or officials designated by him of information furnished by any person under this chapter as he deems necessary to carry out the purposes of this chapter. Nothing in this section shall be construed to require any Federal agency to disclose to any official exercising authority under this chapter any information or report collected under legal authority other than this chapter where disclosure is prohibited by law. Information collected pursuant to [the above reports] may be used only—
(1) for analytical or statistical purposes within the United States Government; or
(2) for the purpose of a proceeding under subsection (e) of this section [penalty provisions] or under section 3105(b) or (c) of this title [civil and criminal actions].
No official or employee designated to perform functions under this chapter, including consultants and persons working on contracts awarded pursuant to this chapter, may publish or make available to any other person any information collected … in a manner that the person who furnished the information can be specifically identified except as provided in this section. No person can compel the submission or disclosure of any report or constituent part thereof collected pursuant to this chapter, or any copy of such report or constituent part thereof, without the prior written consent of the person who maintained or furnished such report … and without prior written consent of the customer, where the person who maintained or furnished such report included information identifiable as being derived from the records of such customer.
22 U.S.C. 3104(c).
The statute also permits interagency information sharing of selected identification information upon written request; specifically, authorization to disclose information to the Bureau of the Census and the Bureau of Labor Statistics. 22 U.S.C. 3104(d).
[iii] “Affiliate” means an entity which is directly or indirectly owned or controlled by a person to the extent of 10% or more of its voting stock or an equivalent interest for an unincorporated business, including a branch.