Direct Investment Surveys: BE-10, Benchmark Survey of U.S. Direct Investment Abroad
| Published date | 12 November 2019 |
| Citation | 84 FR 60912 |
| Record Number | 2019-24414 |
| Section | Rules and Regulations |
| Court | Economic Analysis Bureau |
Federal Register, Volume 84 Issue 218 (Tuesday, November 12, 2019)
[Federal Register Volume 84, Number 218 (Tuesday, November 12, 2019)]
[Rules and Regulations]
[Pages 60912-60915]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-24414]
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DEPARTMENT OF COMMERCE
Bureau of Economic Analysis
15 CFR Part 801
[Docket No. 191104-0074]
RIN 0691-AA89
Direct Investment Surveys: BE-10, Benchmark Survey of U.S. Direct
Investment Abroad
AGENCY: Bureau of Economic Analysis, Commerce.
ACTION: Final rule.
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SUMMARY: This final rule amends regulations of the Department of
Commerce's Bureau of Economic Analysis (BEA) to set forth the reporting
requirements for the 2019 BE-10, Benchmark Survey of U.S. Direct
Investment Abroad (``BE-10 survey''). The BE-10 survey is conducted
every five years; the prior survey covered 2014. The BE-10 survey
covers the universe of U.S. direct investment abroad and is BEA's most
comprehensive survey of such investment. For the 2019 BE-10 survey, BEA
will make changes in data items collected, the design of the survey
forms, and the reporting requirements for the survey to satisfy
changing data needs and improve data quality and the effectiveness and
efficiency of data collection.
DATES: This final rule will be effective December 12, 2019.
FOR FURTHER INFORMATION CONTACT: Ricardo Limes, Chief, Multinational
Operations Branch (BE-69), Bureau of Economic Analysis, U.S. Department
of Commerce, Washington, DC 20233; phone (301) 278-9659; or via email
[email protected].
SUPPLEMENTARY INFORMATION: The BE-10, Benchmark Survey of U.S. Direct
Investment Abroad, is a mandatory survey and is conducted once every
five years by BEA under the authority of the International Investment
and Trade in Services Survey Act (22 U.S.C. 3101-3108).
The BE-10 survey covers the U.S. direct investment abroad universe
and is BEA's most comprehensive survey of such investment. U.S. direct
investment abroad is defined as the ownership or control, directly or
indirectly, by one U.S. person of 10 percent or more of the voting
securities of an incorporated foreign business enterprise or an
equivalent interest in an unincorporated foreign business enterprise,
including a branch.
The purpose of the BE-10 survey is to obtain universe data on the
financial and operating characteristics of, and on positions and
transactions between, U.S. parent companies and their foreign
affiliates. The data are needed to measure the size and economic
significance of U.S. direct investment abroad, measure changes in such
investment, and assess its impact on the U.S. and foreign economies.
Such data are generally found in enterprise-level accounting records of
respondent companies. The benchmark data provide a baseline for
subsequent sample-based estimates in non-benchmark years. In
particular, they serve as benchmarks for the quarterly direct
investment estimates included in the U.S. international transactions,
international investment position, and national income and product
accounts, and for annual estimates of the U.S. direct investment abroad
position and of the activities of U.S. multinational enterprises.
On August 7, 2019, BEA published a notice of proposed rulemaking
that set forth the reporting requirements for the BE-10, Benchmark
Survey of U.S. Direct Investment Abroad (84 FR 38583). Two
[[Page 60913]]
comments on the proposed rule were received.
The Global Legal Entity Identifier Foundation (GLEIF), an
international organization supporting the implementation and use of the
Legal Entity Identifier (LEI), expressed support for BEA's proposal to
collect the 20-digit LEI of each U.S. parent and foreign affiliate on
the BE-10A, BE-10B, and BE-10C forms. Collecting the LEI on the BE-10
survey will assist in matching entities across internal and external
databases, enabling better verification of data and linking to other
surveys and publicly available information.
The Bank Policy Institute (BPI) expressed support for the survey
and BEA's efforts to measure the digital economy. BPI requested
clarification on several aspects of the proposed questions on the
digital economy and regional headquarters. BEA will include definitions
of new terms and guidance for survey respondents in the final version
of the survey forms. BPI also recommended that BEA not change the
reporting requirements for the BE-10 Claim for Not Filing because of
concerns about burden. BEA clarified that a BE-10 Claim For Not Filing
only needs to be filled out for those foreign affiliates that do not
meet the reporting requirements of the survey and for which BEA
contacts the reporter. By providing a standard form for notifying BEA
that a foreign affiliate no longer meets the survey requirements, BEA
is reducing respondent burden.
This final rule amends 15 CFR part 801 to set forth the reporting
requirements for the BE-10, Benchmark Survey of U.S. Direct Investment
Abroad. Under this final rule, persons subject to the reporting
requirements of the BE-10 survey would be required to respond, whether
or not they are contacted by BEA.
Description of Changes
The final rule amends the regulations (15 CFR part 801) and the
survey forms for the BE-10 survey. These amendments include changes in
data items collected, the design of the survey forms, and the reporting
requirements for the survey.
BEA will change the reporting requirements for certain private
funds that file the BE-10 survey. BEA, in cooperation with the U.S.
Department of the Treasury, will instruct reporters of investments in
private funds that meet the definition of direct investment (that is,
ownership by one person of 10 percent or more of the voting interest of
a business enterprise) but display characteristics of portfolio
investment (specifically, investors who do not intend to control or
influence the management of an operating company) to report through the
Treasury International Capital (TIC) reporting system. Reporting
through TIC is more efficient because other related portfolio
investments are already being reported there. Such private funds should
not report on the BE-10 survey and BEA's other direct investment
surveys. Direct investment in operating companies, including investment
by and through private funds, will continue to be reported to BEA. This
change has already been implemented on BEA's other surveys of U.S.
direct investment abroad: The BE-577, Quarterly Survey of U.S. Direct
Investment Abroad; and the BE-11, Annual Survey of U.S. Direct
Investment Abroad. Additional information on the change in reporting
requirements for investments in private funds can be found in the
Direct Investment Surveys: BE-577, Quarterly Survey of U.S. Direct
Investment Abroad-Transactions of U.S. Reporter With Foreign Affiliate,
and Changes to Private Fund Reporting on Direct Investment Surveys
Federal Register notice issued in 2016 (81 FR 33658).
BEA will add, delete, and modify some items on the BE-10 survey
forms. Most of the additions are in response to suggestions from data
users and to provide more information about U.S. direct investment
abroad. The following items will be added or modified on the BE-10
survey:
(1) The form of organization question for the U.S. reporter (item 2
on the BE-10A form, the form that collects information on the domestic
operations of U.S. parent companies) will be modified to include more
options: Corporations (except for S corporations); partnerships; S
corporations; limited liability companies (LLCs); individual, estate,
or trust; and other (specify). This information will help BEA to
produce economic statistics by sector.
(2) A question will be added to collect the 20[hyphen]digit Legal
Entity Identifier of each U.S. parent and foreign affiliate on the BE-
10A, BE-10B, and BE-10C forms (the BE-10B and BE-10C forms collect
information on foreign affiliate operations). This information will
assist in matching entities across databases, enabling better
verification of data and linking to other surveys and publicly
available data.
(3) For each publicly traded company, the stock exchange on which
it is listed and the ticker symbol will be collected on the BE-10A
form. This information will assist in matching entities across
databases, enabling better verification of data and linking to other
surveys and publicly available data.
(4) The income statement item on income from equity investments
(item 44) on the BE-10A form will be modified to separately collect
income from unconsolidated U.S. investments and from foreign
investments. This will aid in resolving discrepancies between the BE-10
and the BE-577 surveys.
(5) Item 73 on the BE-10A and item 127 on the BE-10B forms collect
the amount of restatement in a company's property, plant, and
equipment. This question will be modified to separately collect
restatement due to ``change in entity'' and due to ``change in
accounting methods or principles.'' A checkbox question will be added
to the BE-10A and BE-10B forms asking if the change due to accounting
methods or principles is due in whole or in part to implementation of
FASB ASU No. 2016-02, Leases (Topic 842). This information will allow
BEA to assess the impact on BEA's statistics of the change in
accounting standards on leases.
(6) Questions will be added to collect sales, employment, and costs
and expenses (excluding compensation) on the BE-10A form, and sales on
the BE-10B form, related to the provision of selected services
generally recognized as prevalent in the digital economy. These
selected services are (1) cloud computing, (2) digital intermediation
services on both the BE-10A and BE-10B forms, and (3) advertising on
the BE-10B form. In addition, checkboxes will be added to the BE-10A
and BE-10B forms to collect the percentage of the respondent's sales of
services delivered remotely, sales of services that were digitally
ordered, and sales of goods that were digitally ordered, along with
checkboxes to identify if this information was sourced from accounting
records or from recall/general knowledge. These questions will
contribute to BEA's efforts to measure the digital economy.
(7) A checkbox question will be added to the BE-10B and BE-10C
forms to capture whether the affiliate serves as a regional
headquarters. This information will support research into the role and
impact of regional headquarters in the operations of multinational
enterprises.
(8) A checkbox question will be added to the BE-10B forms to
collect information on the value of R&D performed by the U.S. parent
for the foreign affiliate under a collaborative R&D agreement, such as
a cost-sharing agreement. This question will help BEA follow the
production and use of intellectual property in global value chains and
their impacts on economic statistics.
[[Page 60914]]
(9) A section will be added to the BE-10 Claim for Not Filing to be
filled out for those foreign affiliates for which BEA contacts the
reporter but do not meet the reporting requirements of the survey. This
section will make it easier for reporters to indicate to BEA which
affiliates should be removed from the survey.
a. The section will include a private funds exemption option. This
is a change to prior reporting requirements described above.
b. There will also be an option to select if the U.S. reporter no
longer owns the foreign affiliate and if this was due to the affiliate
being sold or liquidated, or because the U.S. reporter's ownership
interest in the affiliate fell below 10 percent.
The final rule will also eliminate or consolidate the following
items from the BE-10 survey:
(1) Item 8 on the BE-10A, which asks if the U.S. reporter is a
bank, will be removed. This question was used in the past when
reporting requirements for direct investment surveys were different for
banks than other industries but is no longer needed.
(2) Questions on contract manufacturing services will be deleted
(items 33-35 on the BE-10A form). The data collected have been
burdensome for companies to provide and have not been widely used by
data users. Alternative methods are being developed to measure and
study contract manufacturing.
(3) The petroleum and mining exploration and development
expenditures item will be removed from the BE-10A form (item 80) and
BE-10B form (item 135). This item was used to calculate the current
cost adjustment to the direct investment statistics in the
international transactions accounts (ITAs) but is not used in the
current methodology.
(4) The trade in goods by world region questions (items 99-104 and
109-114) on the BE-10A form will be removed. The data collected have
been burdensome for companies to provide and have not been widely used
by data users. BEA is exploring alternative methods to produce
geographical detail on trade by U.S. multinational companies.
(5) Option 2 of item 11 on the BE-10B form and item 8 on the BE-10C
form, which collect information on why the affiliate will no longer
report on the survey, will be removed. This information will now be
captured on the BE-10 Claim for Not Filing (as discussed in item 9 of
the additions and modifications section above). U.S. reporters will no
longer be required to complete the rest of the BE-10B or BE-10C form
with partial year information for foreign affiliates that were sold,
merged, reorganized, liquidated, seized, or otherwise ceased to exist
at some point during, but before the end of, their fiscal year that
ended in the calendar year covered by the BE-10 survey.
(6) Items 18 and 19 on the BE-10B form, and 14 and 15 on the BE-10C
form, which collect the direct ownership interest held by ``foreign
persons in this affiliate's country of location'' and by ``all other
foreign persons,'' will be combined into one item on each of the forms.
(7) Questions collecting information on sales by world region
(items 105-110) and on sales to the top five countries outside of the
country of location of the affiliate (items 111-116) on the BE-10B form
will be removed. The data collected have been burdensome for companies
to provide and have not been widely used by data users. BEA will
continue to collect items 101-104, which allow sales to be
disaggregated into goods and services and by whether the sales are to
the United States, to the host country, or to other foreign countries.
These items are more widely used.
(8) Several items of Part V of the BE-10B form and Part III of the
BE-10C form will be removed, except for the items noted below. These
data were used to validate the information collected on the quarterly
survey, but data reported elsewhere in the BE-10 forms are sufficient
for this purpose. The following items will be retained:
a. A question on reverse investment (item 167 on the BE-10B form).
b. Intercompany debt balances (items 63-65 on the BE-10C form) for
foreign affiliates with less than $60 million in assets, sales, or net
income.
Executive Order 12866
This final rule has been determined to be not significant for
purposes of E.O. 12866.
Executive Order 13132
This final rule does not contain policies with federalism
implications sufficient to warrant preparation of a federalism
assessment under E.O. 13132.
Paperwork Reduction Act
The collection of information in this final rule was submitted to
the Office of Management and Budget (OMB) pursuant to the requirements
of the Paperwork Reduction Act (PRA). OMB approved the information
collection under OMB control number 0608-0049.
Notwithstanding any other provisions of the law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the PRA unless that collection displays a currently
valid OMB control number.
The BE-10 survey is expected to result in the filing of reports
from approximately 18,000 respondents. A complete response includes a
BE-10A form for the U.S. parent's domestic operation and one or more
BE-10B, BE-10C, or BE-10D forms for its foreign affiliates. BEA
estimates that U.S. parents will submit 18,000 BE-10A forms, 19,100 BE-
10B forms, 14,500 BE-10C forms, 18,000 BE-10D forms, and 2,000 BE-10
Claims for Not Filing. Total annual burden is calculated by multiplying
the estimated number of submissions of each form by the average hourly
burden per form, which is 10 hours for the BE-10A form, 19 hours for
the BE-10B form, 6 hours for the BE-10C form, 3 hours for the BE-10D
form, and 0.5 hours for the BE-10 Claim for Not Filing. The estimated
total respondent burden for this survey is estimated at 684,900 hours.
The respondent burden for this collection of information is expected to
vary considerably among respondents because of differences in company
structure, size, and complexity. The burden includes time for reviewing
instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information. The average respondent burden is 38 hours
per response (684,900 hours/18,000 respondents), compared to an average
burden of 144 hours and total burden of 561,100 hours for the previous
(2014) BE-10 survey. The increase in the estimated total respondent
burden reflects an increase in the respondent universe of U.S. and
foreign entities that are required to file the BE-10 survey. The
average burden decreased because the newer respondents on average file
fewer and more abbreviated forms and because the changes to the survey
will result in a net decrease in the amount of information collected on
the survey.
Written comments regarding the burden-hour estimates or other
aspects of the collection-of-information requirements contained in the
final rule should be sent to both BEA via email at
[email protected], and OMB, OIRA, Paperwork Reduction Project 0608-
0049, Attention PRA Desk Officer for BEA, via email at
[email protected].
[[Page 60915]]
Regulatory Flexibility Act
The Chief Counsel for Regulation, Department of Commerce, certified
to the Chief Counsel for Advocacy, Small Business Administration, under
the provisions of the Regulatory Flexibility Act (RFA), 5 U.S.C.
605(b), that this action will not have a significant economic impact on
a substantial number of small entities. The factual basis for the
certification was published in the proposed rule and is not repeated
here. No final regulatory flexibility analysis was prepared, as no
comments were received regarding the determination that this action
will not have a significant economic impact on a substantial number of
small entities.
List of Subjects in 15 CFR Part 801
Economic statistics, International transactions, Multinational
companies, Penalties, Reporting and record keeping requirements, U.S.
direct investment abroad.
Paul W. Farello,
Associate Director of International Economics, Bureau of Economic
Analysis.
For reasons set forth in the preamble, BEA amends 15 CFR part 801
as follows:
PART 801--SURVEY OF INTERNATIONAL TRADE IN SERVICES BETWEEN U.S.
AND FOREIGN PERSONS AND SURVEYS OF DIRECT INVESTMENT
0
1. The authority citation for 15 CFR part 801 continues to read as
follows:
Authority: 5 U.S.C. 301; 15 U.S.C. 4908; 22 U.S.C. 3101-3108;
E.O. 11961 (3 CFR, 1977 Comp., p. 86), as amended by E.O. 12318 (3
CFR, 1981 Comp. p. 173); and E.O. 12518 (3 CFR, 1985 Comp. p. 348).
0
2. Revise Sec. 801.8 to read as follows:
Sec. 801.8 Rules and regulations for the BE-10, Benchmark Survey of
U.S. Direct Investment Abroad.
A BE-10, Benchmark Survey of U.S. Direct Investment Abroad, will be
conducted every five years and covers years ending in 4 and 9. All
legal authorities, provisions, definitions, and requirements contained
in Sec. Sec. 801.1 and 801.2 and 801.4 through 801.6 are applicable to
this survey. Specific additional rules and regulations for the BE-10
survey are given in paragraphs (a) through (d) of this section. More
detailed instructions are given on the report forms and instructions.
(a) Response required. A response is required from persons subject
to the reporting requirements of the BE-10, Benchmark Survey of U.S.
Direct Investment Abroad, contained in this section, whether or not
they are contacted by BEA. Also, a person, or their agent, contacted in
writing by BEA about reporting in this survey must respond by filing a
properly completed BE-10 report (BE-10A and BE-10B, BE-10C, BE-10D,
and/or BE-10 Claim for Not Filing).
(b) Who must report. A BE-10 report is required of any U.S. person
that had a foreign affiliate--that is, that had direct or indirect
ownership or control of at least 10 percent of the voting stock of an
incorporated foreign business enterprise, or an equivalent interest in
an unincorporated foreign business enterprise, including a branch--at
the end of the U.S. person's fiscal year that ended in the calendar
year covered by the survey. Foreign affiliates that are private funds
and meet certain criteria are exempt from the BE-10 survey.
Specifically, if a foreign affiliate meets all of the criteria in
paragraphs (b)(1) though (3) of this section, the U.S. reporter is not
required to file a BE-10 form for that affiliate except to indicate
exemption from the survey if contacted by BEA:
(1) The foreign affiliate is a private fund; and
(2) The private fund foreign affiliate does not own, directly or
indirectly through another business enterprise, an ``operating
company''--i.e., a business enterprise that is not a private fund or a
holding company--in which the consolidated U.S. reporter owns at least
10 percent of the voting interest; and
(3) If the U.S. reporter owns the private fund indirectly (through
one or more other business enterprises), there are no ``operating
companies'' between the consolidated U.S. reporter and the indirectly-
owned foreign private fund.
(c) Forms to be filed. (1) Form BE-10A must be completed by a U.S.
reporter. Form BE-10A is required to cover the fully consolidated U.S.
domestic business enterprise. It must also file Form(s) BE-10B, BE-10C,
and/or BE-10D for its foreign affiliates, whether held directly or
indirectly.
(2) Form BE-10B must be filed for each majority-owned foreign
affiliate (for purposes of this survey, a ``majority-owned'' foreign
affiliate is one in which the combined direct and indirect ownership
interest of all U.S. parents of the foreign affiliate exceeds 50
percent) for which any of the items in paragraph (c)(2)(i) through
(iii) of this section (not just the U.S. reporter's share) was greater
than $80 million (positive or negative) at the end of, or for, its
fiscal year that ended in the calendar year covered by the survey:
(i) Total assets (without netting liabilities);
(ii) Sales or gross operating revenues, excluding sales taxes; or
(iii) Net income after provision for foreign income taxes.
(3) Form BE-10C must be filed:
(i) For each majority-owned foreign affiliate for which any one of
the three items listed in paragraph (c)(2) of this section was greater
than $25 million but for which none of these items was greater than $80
million (positive or negative) at the end of, or for, its fiscal year
that ended in the calendar year covered by the survey; and
(ii) For each minority-owned foreign affiliate (for purposes of
this survey, a ``minority-owned'' foreign affiliate is one in which the
combined direct and indirect ownership interest of all U.S. parents of
the foreign affiliate is 50 percent or less) for which any one of the
three items listed in paragraph (c)(2) of this section was greater than
$25 million (positive or negative) at the end of, or for, its fiscal
year that ended in the calendar year covered by the survey.
(4) Form BE-10D must be filed for majority- or minority-owned
foreign affiliates for which none of the three items listed in
paragraph (c)(2) of this section was greater than $25 million (positive
or negative) at the end of, or for, its fiscal year that ended in the
calendar year covered by the survey. Form BE-10D is a schedule; a U.S.
reporter would submit one or more pages of the form depending on the
number of affiliates that are required to be filed on this form.
(5) BE-10 Claim for Not Filing will be provided for response by:
(i) Persons that are not subject to the reporting requirements of
the BE-10 survey but have been contacted by BEA concerning their
reporting status; or
(ii) U.S. reporters that have been contacted by BEA concerning
their reporting status for foreign affiliates that are no longer
subject to the reporting requirements of the BE-10 survey.
(d) Due date. A fully completed and certified BE-10 report
comprising Form BE-10A and Form(s) BE-10B, BE-10C, BE-10D, and/or BE-10
Claim for Not Filing (as required) is due to be filed with BEA not
later than May 31 of the year after the year covered by the survey, for
those U.S. reporters filing fewer than 50, and June 30, for those U.S.
reporters filing 50 or more, foreign affiliate Forms BE-10B, BE-10C,
and/or BE-10D.
[FR Doc. 2019-24414 Filed 11-8-19; 8:45 am]
BILLING CODE 3510-06-P
