Bureau of Economic Analysis – Five-Year Benchmark Survey

By Joshua E. French

frenchWhat is this?

The Bureau of Economic Analysis (BEA) regularly analyzes data related to US investment in foreign corporations.  Many large companies are specifically requested to provide data which is included in semi-annual and annual reports.  Every five years, however, the BEA produces a more comprehensive five-year benchmark survey (the last one occurred for fiscal year 2009).

How does this affect me?

At the end of last year, the BEA adopted a new rule pursuant to the International Investment and Trade in Services Survey Act, which changed the requirements for who had to report data for the benchmark survey.  Whereas prior benchmark surveys only required responses from those companies specifically requested by the BEA, the new rule mandates that U.S. Persons (including individuals, business entities, trusts, funds, etc.) that owned, directly or indirectly, at least 10% of the voting securities of a “Foreign Affiliate” (essentially any entity governed by the laws of another country) during 2014, must complete the reporting requirements for themselves and each such foreign affiliate.

What are some examples?

  • A U.S. parent entity with foreign subsidiaries.
  • The general partner of a U.S. private fund which has investments in foreign portfolio companies.
  • A U.S. person which manages an offshore private fund.

What if I don’t fill it out?

Failing to file could result in civil penalties of up to $25,000 or injunctive relief.  Willful failure to file could even result in criminal penalties of up to a $10,000 fine and imprisonment for up to one year.

What does this report entail?

Each U.S. Reporter must file one BE-10A form for its domestic consolidated business.  If the domestic business enterprise’s total assets, sales or gross operating revenues excluding sales taxes or net income after taxes exceeds $300 million (either positive or negative), you must complete the entire form.  If the U.S. Reporter doesn’t meet this threshold, it only needs to report certain sections.  The BE-10A form asks for information regarding the U.S. Reporter’s business sector, sales and employment information, contract manufacturing services, financial data (limited if the $300 million threshold is not met, more significant if the threshold is met) and import and export data.

What about for the foreign affiliates?

For each “Foreign Affiliate” for which the U.S. Reporter is required to provide data, you must file a Form BE-10B, BE-10C or BE-10D.

  • You file a Form BE-10B if the Foreign Affiliate (i) is majority-owned by the U.S. Reporter AND (ii) its total assets, sales or gross revenue (excluding taxes) or net income (after foreign income tax) exceed $80 million (positive or negative).
  • You file a Form BE-10C if the Foreign Affiliate (i) (1) is minority-owned by the U.S. Reporter AND (2) its total assets, sales or gross revenue (excluding taxes) or net income (after foreign income tax) exceed $80 million (positive or negative); OR (ii) if its total assets, sales or gross revenue (excluding taxes) or net income (after foreign income tax) exceeds $25 million but is less than $80 million (positive or negative); OR (iii) if the Foreign Affiliate is the parent of another Foreign Affiliate which has to file a Form BE-10B or BE-10C.
  • You file a Form BE-10D if the Foreign Affiliate doesn’t meet any of the above criteria.

The BE-10B is extremely detailed, seeking information regarding location, when it was formed, the ownership breakdown, what industries it is involved in, financial and operating data, and investments and transactions between the U.S. Reporter and the Foreign Affiliate.  The entire form is 24 pages and you would have to complete one form for each Foreign Affiliate that meets the criteria set forth above.

The BE-10C is slightly less burdensome (16 pages) and covers much of the same information as above, with slightly less detail.

The BE-10D is very straightforward.  A U.S. Reporter can list every Foreign Affiliate which meets the criteria for BE-10D on one form and only needs to list for such affiliate its name, location, industry code, number of employees, the U.S. Reporter’s ownership percentage, total assets, total liabilities, gross revenues, net income or loss after income tax, and any intercompany debt between the Foreign Affiliate and the U.S. Reporter.

Is this confidential?

Yes.  The BEA is not permitted to identify the individual respondents to the Benchmark Survey and may not share responses with other government agencies (including the IRS).  The information provided may only be used for analytical and statistical purposes.

When is it due?

The deadline is June 30, 2015.  There is an opportunity to request an extension through no later than August 31, 2015, but the request must be filed by June 30, 2015.

For more information contact Josh French.

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