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Bureau of Economic Analysis ("BEA") Investment Surveys – Reporting Requirements

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Rödl & Partner Tax Matters Vol 2019 – 1, published in January 2019

 

Overview

The Bureau of Economic Analysis (BEA) prepares official U.S. economic statistics to provide timely, accurate, and relevant economic information that helps gauge the performance of the U.S. economy and the role of the United States in the global economy. The statistics on U.S. direct investment abroad (outward direct investment) and foreign direct investment in the United States (inward direct investment) are important components of these statistics. Below please find information regarding how the statistics are used, legal authority for the surveys, and descriptions of the various surveys conducted by the BEA, including who must complete the surveys and when they are required.

 

Statistics Gathered From Surveys

The BEA publishes two broad sets of statistics on outward and inward direct investment: (1) statistics on international transactions and direct investment positions and (2) statistics on the activities of multinational enterprises. The BEA also publishes statistics on new inward direct investment.

 

International Transactions

Statistics regarding international transactions cover U.S. affiliates’ transactions with their foreign parents and foreign affiliates’ transactions with their U.S. parents.

 

Direct Investment Positions

Statistics on direct investment positions measure the total outstanding level of outward and inward direct investment at the end of each quarter.

 

Activities of Multinational Enterprises

Statistics on the activities of multinational enterprises provide a picture of the overall activities of foreign affiliates and their U.S. parent companies and the activities of U.S. affiliates of foreign parents. These statistics also provide a variety of indicators of the financial structure and operations of multinational enterprises. The statistics on foreign affiliates and U.S. affiliates cover the entire operations of the affiliate, irrespective of the percentage of U.S. or foreign ownership. These statistics include the following items: value added, sales, employment, compensation of employees, capital expenditures, exports, imports, and research and development expenditures, among others. This information is used to analyze the characteristics, performance, and economic impact of multinational enterprises.

 

New Inward Direct Investment

Statistics on new foreign direct investment in the United States provide information on the acquisition and establishment of U.S. business enterprises by foreign investors and on the expansion of existing U.S. affiliates of foreign companies to establish new production facilities. These annual statistics provide information on the amount and characteristics of new investments in the United States by foreign investors.

 

Collecting Information

The BEA conducts seven broad mandatory surveys to collect information on direct investment. These surveys consist of quarterly, annual, and benchmark surveys of outward and inward direct investment and a survey of new inward direct investment. The quarterly surveys provide information on direct investment transactions and income. Annual and benchmark surveys provide information on the activities of multinational enterprises.

Benchmark surveys are conducted every 5 years. They provide the most comprehensive coverage of business entities, transactions, and data items. Quarterly and annual surveys are largely cutoff sample surveys of U.S. parents and their foreign affiliates and of U.S. affiliates of foreign parents above size-exemption levels.

 

Legal Authority and Confidentiality

Reporting on BEA’s direct investment surveys is mandatory under the International Investment and Trade in Services Survey Act. The act protects the confidentiality of the data that companies report. Without the prior written permission of the reporter, 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. In addition, the BEA is prohibited from granting another agency access to the data for tax, investigative, or regulatory purposes.

 

Penalties for Non-Compliance

Failing to file these surveys, when required, can result in civil penalties of up to $45,000. Willful failure to report can result in a penalty of not more than $10,000. In addition to the penalty, an individual who willfully fails to file may be imprisoned for not more than one year. Any officer, director, employee, or agent of any corporation who knowingly participates in such violations, upon conviction, may be punished by a like fine, imprisonment or both.

 

Completing the Survey

The surveys of U.S. direct investment abroad may be filed electronically through BEA’s eFile system on BEA’s Web site at www.bea.gov/efile. The forms and instructions are available at www.bea.gov/dia.

 

Filing a Late Survey

While penalties could be imposed for late filing, the BEA generally does not assert such penalties and has requested that any required surveys be completed even if submitted late.

 

Surveys Related to U.S. Direct Investment Abroad

All U.S. persons that own, directly or indirectly, 10 percent or more of the voting securities of an incorporated foreign business enterprise or an equivalent interest in an unincorporated foreign business enterprise are required to report. In a broad legal sense, a “U.S. person” is any individual, branch, partnership, associated group, association, estate, trust, corporation, or other organization that is resident in, or subject to, the jurisdiction of the United States. A U.S. person who is required to report is referred to as “a U.S. reporter.” An affiliate outside the United States in which a U.S. person holds a 10 percent or more voting interest (or the equivalent) is referred to as “a foreign affiliate.”

 

The surveys here are for U.S. persons owning entities in a foreign country. See Flowcharts 1 and 2 to determine if you are subject to these surveys.

 

Surveys Related to Foreign Direct Investment in the United States

Reporting is required of all U.S. business enterprises in which a foreign person (in the broad legal sense, including a company) owns, directly or indirectly, 10 percent or more of the voting securities of an incorporated U.S. business enterprise or an equivalent interest of an unincorporated U.S. business enterprise. This includes foreign ownership of improved and unimproved real estate except residential real estate held exclusively for personal use. A U.S. business enterprise that is required to report is referred to as a “U.S. affiliate.” A foreign person that owns a 10 percent or more voting interest (or the equivalent) in a U.S. affiliate is referred to as a “foreign parent.” The foreign parent is the first person outside the United States in a foreign chain of ownership.

 

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

 

The surveys here are for foreign persons owning entities in the U.S. See Flowchart 3 and 4 to determine if you are subject to these surveys.

 

Flowchart 1:

Are you subject to surveys related to U.S. direct investment abroad?

 

Flowchart 2:

What do I file for benchmark survey BE-10? Note that the last benchmark survey was for the year 2014 and should still be completed if required.
 

 

Flowchart 3:

Are you subject to surveys related to foreign direct investment in the United States?

 

Flowchart 4:

What do I file for benchmark survey BE-12? Note that the last benchmark survey was for the year 2017 and should still be completed if required.

 

 

If you have any questions, please contact your Rödl & Partner representative.

 

Information above taken from the BEA's "A Guide to BEA's Direct Investment Surveys".

 

 

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