Direct Investment Surveys: BE-10, Benchmark Survey of U.S. Direct Investment Abroad, 38583-38586 [2019-16628]
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38583
Proposed Rules
Federal Register
Vol. 84, No. 152
Wednesday, August 7, 2019
This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
DEPARTMENT OF COMMERCE
Bureau of Economic Analysis
15 CFR Part 801
[Docket No. 190726–0005]
RIN 0691–AA89
Direct Investment Surveys: BE–10,
Benchmark Survey of U.S. Direct
Investment Abroad
Bureau of Economic Analysis,
Commerce.
ACTION: Notice of proposed rulemaking.
AGENCY:
This proposed rule would
amend 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 proposes 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: Comments on this proposed rule
will receive consideration if submitted
in writing on or before 5:00 p.m.
October 7, 2019.
ADDRESSES: You may submit comments,
identified by RIN 0691–AA89 and
referencing the agency name (Bureau of
Economic Analysis), by any of the
following methods:
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
For Keyword or ID, enter ‘‘EAB–2019–
0002.’’
• Email: ricardo.limes@bea.gov.
• Mail: Multinational Operations
Branch, U.S. Department of Commerce,
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SUMMARY:
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Bureau of Economic Analysis, BE–69,
Washington, DC 20233.
• Hand Delivery/Courier:
Multinational Operations Branch, U.S.
Department of Commerce, Bureau of
Economic Analysis, BE–69, 4600 Silver
Hill Road, Suitland, MD 20746.
Written comments regarding the
burden-hour estimates or other aspects
of the collection-of-information
requirements contained in the proposed
rule should be sent to both BEA through
any of the methods above and to the
Office of Management and Budget
(OMB), OIRA, Paperwork Reduction
Project 0608–0049, Attention PRA Desk
Officer for BEA, via email at OIRA_
Submission@omb.eop.gov, or by FAX at
202–395–7245.
Public Inspection: All comments
received are a part of the public record
and will generally be posted to https://
www.regulations.gov without change.
Personal identifying information
voluntarily submitted by the commenter
may be publicly accessible. Do not
submit confidential business
information or otherwise sensitive or
protected information. BEA will accept
anonymous comments (enter N/A in
required fields if you wish to remain
anonymous).
FOR FURTHER INFORMATION CONTACT:
Ricardo Limes, Chief, Multinational
Operations Branch (BE–69), Bureau of
Economic Analysis, U.S. Department of
Commerce, Washington, DC 20233;
telephone number: (301) 278–9659;
email: ricardo.limes@bea.gov.
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
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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 nonbenchmark 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.
This proposed rule would amend 15
CFR part 801 to set forth the reporting
requirements for the BE–10, Benchmark
Survey of U.S. Direct Investment
Abroad. Under this proposed rule,
persons subject to the reporting
requirements of the BE–10, Benchmark
Survey of U.S. Direct Investment
Abroad, would be required to respond,
whether or not they are contacted by
BEA.
The Department of Commerce, as part
of its continuing effort to reduce
paperwork and respondent burden,
invites the general public and other
Federal agencies to comment on
proposed and/or continuing information
collections, as required by the
Paperwork Reduction Act of 1995, 44
U.S.C. 3501–3520 (PRA).
Description of Changes
The proposed changes would amend
the regulations 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 proposes to 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, proposes to 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
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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 proposes to add, delete, and
modify some items on the BE–10 survey
forms. Most of the additions are
proposed in response to suggestions
from data users and to provide more
information about U.S. direct
investment abroad. The following items
would be added to, 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-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
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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.
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(9) A section will be added to the BE–
10 Claim for Not Filing to report
affiliates that do not meet the survey
reporting requirements. This section
will make it easier for reporters to
indicate to BEA which affiliates should
be removed from the survey.
a. The section would include a private
funds exemption option. This is a
change to prior reporting requirements
described above.
b. There would 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.
BEA also proposes to 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
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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 proposed rule has been
determined to be not significant for
purposes of E.O. 12866.
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Executive Order 13132
This proposed rule does not contain
policies with Federalism implications
sufficient to warrant preparation of a
Federalism assessment under E.O.
13132.
Paperwork Reduction Act
This proposed rule contains a
collection-of-information requirement
subject to review and approval by OMB
under the PRA. The requirement will be
submitted to OMB for approval as a
reinstatement, with change, of a
previously approved collection under
OMB control number 0608–0049.
Notwithstanding any other provisions
of the law, no person is required to
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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, as proposed, 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
BEA is proposing a net decrease in the
amount of information collected on the
survey.
Comments are requested concerning:
(a) Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the burden estimate;
(c) ways to enhance the quality, utility,
and clarity of the information collected;
and (d) ways to minimize the burden of
the collection of information on the
respondents, including the use of
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automated collection techniques or
other forms of information technology.
Written comments regarding the
burden-hour estimates or other aspects
of the collection-of-information
requirements contained in the proposed
rule should be sent to both BEA and
OMB following the instructions given in
the ADDRESSES section above.
Regulatory Flexibility Act
The Chief Counsel for Regulation,
Department of Commerce, has 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 proposed rulemaking, if
adopted, will not have a significant
economic impact on a substantial
number of small entities. The changes
proposed in this rule are discussed in
the preamble and are not repeated here.
A BE–10 report is required of any U.S.
company 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. company’s 2019 fiscal
year. U.S. companies that have direct
investments abroad tend to be large. To
qualify as a small business, the
multinational enterprise as a whole
must be evaluated when determining if
the business meets the size standards set
by the Small Business Administration
(SBA), i.e. the size determination takes
into account the sizes of both the U.S.
parents and their foreign operations.
BEA estimates that approximately 20
percent of the U.S. multinational
enterprises that will be required to
respond to the BE–10 survey are small
businesses according to the standards
established by the SBA. The number of
items required to be reported for a U.S.
parent and its foreign affiliates is
determined by the size of each in terms
of assets, sales, and net income. In the
BE–10 survey, for the smallest foreign
affiliates—those with assets, sales or
gross operating revenues, and net
income (loss) less than or equal to $25
million (positive or negative)—only a
few selected items would be reported on
a schedule-type form, Form BE–10D. To
further ease the reporting burden on
smaller U.S. companies, U.S. reporters
with total assets, sales or gross operating
revenues, and net income (loss) less
than or equal to $300 million (positive
or negative) are required to report a
subset of items on the BE–10A form for
U.S. reporters, in addition to forms they
may be required to file for their foreign
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affiliates. BEA expects that virtually all
small businesses filing the BE–10 will
complete an abbreviated BE–10A and
BE–10D. The proposed changes
represent a net decrease in the amount
of information collected on the survey,
further reducing the economic impact
on small businesses required to file the
survey.
Because relatively few small
businesses are impacted by this rule,
and because those small businesses that
are impacted are subject to only
minimal recordkeeping burdens, the
Chief Counsel for Regulation certifies
that this proposed rule 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 recordkeeping
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 proposes to amend 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
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).
■
2. Revise § 801.8 to read as follows:
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§ 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 §§ 801.1
through 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,
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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 following 3 criteria, 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 ‘‘majorityowned’’ 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 following three
items (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:
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(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. 2019–16628 Filed 8–6–19; 8:45 am]
BILLING CODE 3510–06–P
E:\FR\FM\07AUP1.SGM
07AUP1
Agencies
[Federal Register Volume 84, Number 152 (Wednesday, August 7, 2019)]
[Proposed Rules]
[Pages 38583-38586]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-16628]
========================================================================
Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
========================================================================
Federal Register / Vol. 84, No. 152 / Wednesday, August 7, 2019 /
Proposed Rules
[[Page 38583]]
DEPARTMENT OF COMMERCE
Bureau of Economic Analysis
15 CFR Part 801
[Docket No. 190726-0005]
RIN 0691-AA89
Direct Investment Surveys: BE-10, Benchmark Survey of U.S. Direct
Investment Abroad
AGENCY: Bureau of Economic Analysis, Commerce.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: This proposed rule would amend 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 proposes 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: Comments on this proposed rule will receive consideration if
submitted in writing on or before 5:00 p.m. October 7, 2019.
ADDRESSES: You may submit comments, identified by RIN 0691-AA89 and
referencing the agency name (Bureau of Economic Analysis), by any of
the following methods:
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments. For Keyword or ID,
enter ``EAB-2019-0002.''
Email: [email protected].
Mail: Multinational Operations Branch, U.S. Department of
Commerce, Bureau of Economic Analysis, BE-69, Washington, DC 20233.
Hand Delivery/Courier: Multinational Operations Branch,
U.S. Department of Commerce, Bureau of Economic Analysis, BE-69, 4600
Silver Hill Road, Suitland, MD 20746.
Written comments regarding the burden-hour estimates or other
aspects of the collection-of-information requirements contained in the
proposed rule should be sent to both BEA through any of the methods
above and to the Office of Management and Budget (OMB), OIRA, Paperwork
Reduction Project 0608-0049, Attention PRA Desk Officer for BEA, via
email at [email protected], or by FAX at 202-395-7245.
Public Inspection: All comments received are a part of the public
record and will generally be posted to https://www.regulations.gov
without change. Personal identifying information voluntarily submitted
by the commenter may be publicly accessible. Do not submit confidential
business information or otherwise sensitive or protected information.
BEA will accept anonymous comments (enter N/A in required fields if you
wish to remain anonymous).
FOR FURTHER INFORMATION CONTACT: Ricardo Limes, Chief, Multinational
Operations Branch (BE-69), Bureau of Economic Analysis, U.S. Department
of Commerce, Washington, DC 20233; telephone number: (301) 278-9659;
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.
This proposed rule would amend 15 CFR part 801 to set forth the
reporting requirements for the BE-10, Benchmark Survey of U.S. Direct
Investment Abroad. Under this proposed rule, persons subject to the
reporting requirements of the BE-10, Benchmark Survey of U.S. Direct
Investment Abroad, would be required to respond, whether or not they
are contacted by BEA.
The Department of Commerce, as part of its continuing effort to
reduce paperwork and respondent burden, invites the general public and
other Federal agencies to comment on proposed and/or continuing
information collections, as required by the Paperwork Reduction Act of
1995, 44 U.S.C. 3501-3520 (PRA).
Description of Changes
The proposed changes would amend the regulations 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 proposes to 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, proposes to 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
[[Page 38584]]
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 proposes to add, delete, and modify some items on the BE-10
survey forms. Most of the additions are proposed in response to
suggestions from data users and to provide more information about U.S.
direct investment abroad. The following items would be added to, 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.
(9) A section will be added to the BE-10 Claim for Not Filing to
report affiliates that do not meet the survey reporting requirements.
This section will make it easier for reporters to indicate to BEA which
affiliates should be removed from the survey.
a. The section would include a private funds exemption option. This
is a change to prior reporting requirements described above.
b. There would 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.
BEA also proposes to 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
[[Page 38585]]
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 proposed rule has been determined to be not significant for
purposes of E.O. 12866.
Executive Order 13132
This proposed rule does not contain policies with Federalism
implications sufficient to warrant preparation of a Federalism
assessment under E.O. 13132.
Paperwork Reduction Act
This proposed rule contains a collection-of-information requirement
subject to review and approval by OMB under the PRA. The requirement
will be submitted to OMB for approval as a reinstatement, with change,
of a previously approved 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, as proposed, 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 BEA is proposing a net
decrease in the amount of information collected on the survey.
Comments are requested concerning: (a) Whether the proposed
collection of information is necessary for the proper performance of
the functions of the agency, including whether the information will
have practical utility; (b) the accuracy of the burden estimate; (c)
ways to enhance the quality, utility, and clarity of the information
collected; and (d) ways to minimize the burden of the collection of
information on the respondents, including the use of automated
collection techniques or other forms of information technology.
Written comments regarding the burden-hour estimates or other
aspects of the collection-of-information requirements contained in the
proposed rule should be sent to both BEA and OMB following the
instructions given in the ADDRESSES section above.
Regulatory Flexibility Act
The Chief Counsel for Regulation, Department of Commerce, has
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 proposed rulemaking, if adopted, will
not have a significant economic impact on a substantial number of small
entities. The changes proposed in this rule are discussed in the
preamble and are not repeated here.
A BE-10 report is required of any U.S. company 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.
company's 2019 fiscal year. U.S. companies that have direct investments
abroad tend to be large. To qualify as a small business, the
multinational enterprise as a whole must be evaluated when determining
if the business meets the size standards set by the Small Business
Administration (SBA), i.e. the size determination takes into account
the sizes of both the U.S. parents and their foreign operations. BEA
estimates that approximately 20 percent of the U.S. multinational
enterprises that will be required to respond to the BE-10 survey are
small businesses according to the standards established by the SBA. The
number of items required to be reported for a U.S. parent and its
foreign affiliates is determined by the size of each in terms of
assets, sales, and net income. In the BE-10 survey, for the smallest
foreign affiliates--those with assets, sales or gross operating
revenues, and net income (loss) less than or equal to $25 million
(positive or negative)--only a few selected items would be reported on
a schedule-type form, Form BE-10D. To further ease the reporting burden
on smaller U.S. companies, U.S. reporters with total assets, sales or
gross operating revenues, and net income (loss) less than or equal to
$300 million (positive or negative) are required to report a subset of
items on the BE-10A form for U.S. reporters, in addition to forms they
may be required to file for their foreign
[[Page 38586]]
affiliates. BEA expects that virtually all small businesses filing the
BE-10 will complete an abbreviated BE-10A and BE-10D. The proposed
changes represent a net decrease in the amount of information collected
on the survey, further reducing the economic impact on small businesses
required to file the survey.
Because relatively few small businesses are impacted by this rule,
and because those small businesses that are impacted are subject to
only minimal recordkeeping burdens, the Chief Counsel for Regulation
certifies that this proposed rule 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 recordkeeping 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 proposes to amend 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 through 801.2 and Sec. Sec. 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 following 3
criteria, 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 following three items (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. 2019-16628 Filed 8-6-19; 8:45 am]
BILLING CODE 3510-06-P