Commerce Department Conducts Benchmark Survey of Foreign Direct Investment in the U.S.

The U.S. Department of Commerce's Bureau of Economic Analysis (BEA) is conducting a five-year benchmark survey of foreign direct investment in the United States. Participation in this survey is mandatory for U.S. businesses (including real estate held for non-personal use) in which a foreign entity or person holds, directly or indirectly, a 10 percent or greater voting interest at the end of the U.S. business's 2022 fiscal year. Companies must furnish a response whether or not they were contacted by BEA about the survey, and the agency may impose civil and criminal penalties on a U.S. business for failure to submit, untimely submission or inaccurate data. Survey responses are due by May 31, 2023 – or by June 30, 2023, for reports submitted via BEA's electronic filing system.

Background

The BE-12 Benchmark Survey of Foreign Direct Investment (FDI) in the United States (BE-12 Survey) is conducted every five years to collect financial and operating statistics of U.S. affiliates and on positions and transactions between U.S. affiliates and their foreign parent groups, which are defined to include all foreign parents and foreign affiliates of foreign parents.

For purposes of the BE-12 Survey, foreign direct investment in the United States is defined as the ownership or control, directly or indirectly, by one foreign person of 10 percent or greater voting securities of an incorporated U.S. business enterprise or an equivalent interest in an unincorporated U.S. business enterprise, including a branch, at the end of the U.S. business's 2022 fiscal year. A foreign person that owns a 10 percent or greater voting interest in a U.S. affiliate is referred to as a "foreign parent."

With some exceptions, a U.S. affiliate must file on a fully consolidated domestic U.S. basis, including the full consolidation of all U.S. business enterprises proceeding down each ownership chain whose voting securities are more than 50 percent owned by the reporting U.S. business enterprise. The fully consolidated entity is considered one U.S. affiliate.

In conjunction with the results from Forms BE-605 (Quarterly Survey) and BE-15 (Annual Survey) in non-benchmark years, reporting data of the BE-12 Survey is used to prepare statistics on the scale and effects of foreign-owned business activities in the United States, measure changes in such activities and assess the impact on the U.S. economy.

Reporting on the BE-12 Survey is mandatory under the International Investment and Trade in Services Survey Act, 22 U.S.C. §§ 3101-08. Importantly, the statute protects the confidentiality of the data that companies report. Without the prior written permission of the reporting U.S. business, the BEA cannot publish or otherwise release the data collected on its surveys in a form that would allow the data of an individual reporter to be identified.

Applicable BE-12 Survey Forms

The survey has three different versions: Forms BE-12A, BE-12B and BE-12C.¹ BEA also has Form BE-12 Claim for Not Filing for U.S. businesses that do not meet the requirements for filing Forms BE-12A, BE-12B and BE-12C.² U.S. businesses that normally file a BE-15 (Annual Survey) should file the benchmark survey instead for 2022.

• Form BE-12A. This form is filed for a majority-owned U.S. affiliate³ that has total assets, sales or net income (loss) of more than $300 million (positive or negative).
• Form BE-12B. This form is filed for a majority-owned U.S. affiliate that has total assets, sales or net income (loss) of more than $60 million but for which none of these exceed $300 million (positive or negative). This form is also filed for a minority-owned U.S. affiliate that has total assets, sales or net income (loss) of more than $60 million (positive or negative).⁴
• Form BE-12C. This form is filed for a U.S. affiliate that has total assets, sales or net income (loss) of $60 million or less (positive or negative).

Changes to BE-12 Survey Forms

Compared with the prior BE-12 Benchmark Survey for fiscal year 2017, BEA has added, deleted and modified some items on the survey forms. Notably, any U.S. affiliate filing on Form BE-12A needs to provide sales data related to 1) cloud computing and data storage and 2) digital intermediation services. In addition, checkboxes will be added to the same form for companies to identify the percentage of their sales of services delivered remotely, sales of services that were digitally ordered and sales of goods that were digitally ordered.⁵ BEA has published guidance on digital economy questions for the 2022 BE-12 Survey.

Reporting Dates and Preparation

The actual BE-12 survey forms have not been published by BEA yet but will be available on BEA's website beginning in early 2023. Survey responses are due by May 31, 2023 – or by June 30, 2023, for reports submitted via BEA's electronic filing system. Failure to provide timely and accurate data may lead to significant civil and criminal penalties.

For more information or further explanation of how to comply with the reporting requirement, please contact the authors or other members of Holland & Knight's International Trade Group.

Notes

¹ BEA has published guidance helping survey respondents determine which BE-12 Form to file.

² The following entities would not meet the BE-12 Survey filing requirements and thus can file a Form BE-12 Claim for Not Filing: U.S. affiliates in which the foreign voting ownership interest is less than 10 percent; U.S. affiliate fully consolidated or merged with the report of another U.S. affiliate; U.S. affiliate that was liquidated or dissolved. Certain private funds may also be exempt from filing.

³ A U.S. affiliate is majority owned if the combined direct or indirect voting ownership interests (or the equivalent) of all the foreign parents of the U.S. affiliate exceed 50 percent.

⁴ A U.S. affiliate is minority owned if the combined direct or indirect voting ownership interests (or the equivalent) of all the foreign parents of the U.S. affiliate are at least 10 percent, but not more than 50 percent.

⁵ See 87 Fed. Reg. 58953 (Sept. 29, 2022).

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