Treasury Sets CFIUS Filing Fees for Certain Transactions
The Treasury Department announced fees for filing certain transactions with the Committee on Foreign Investment in the U.S., according to a notice. The interim rule, which will apply to formal written voluntary notices filed with CFIUS and not transactions submitted through declarations, establishes a range of possible fees, depending on the value of the transaction, with $300,000 being the highest fee. The rule takes effect May 1, but Treasury is accepting public comments through June 1. The agency also issued a fact sheet and a guidance for paying filing fees.
The filing fee structure is unchanged from Treasury’s March notice outlining the proposed changes, with five fee levels of $300,000, $150,000, $75,000, $7,500 and $750. No fee will be imposed for transactions valued below $500,000. The agency said it considered the impact of the fees on foreign investment and small businesses, and reviewed comments it received from its March notice and the implementation of the Foreign Investment Risk Review Modernization Act earlier this year, which referenced the possibility of filing fees (see 2001140060). Some commenters asked Treasury to lower or eliminate the fees, saying they would “discourage” foreign investment in the U.S., but those commenters did not provide specific data or examples, Treasury said.
Treasury does “not believe” the fees will impact foreign investment, saying in the notice that parties “may routinely” spend more on legal and accounting fees than on the actual filing fee. And “given the intent and expectations of Congress” and the “growing number” of CFIUS filings, Treasury said, it “determined that transaction filing fees are appropriate at this time.” The agency also said the fees will allow it to “appropriately generate funding … to support the work of” CFIUS.
Fees will be required for any “formal written notice of a ‘covered transaction’ or ‘covered real estate transaction’ filed with CFIUS,” Treasury said in the fact sheet. The fees will also apply to notices filed by parties at the “end of the declaration process, and where parties choose to notify CFIUS through a written notice of a transaction subject to a mandatory declaration.” The agency clarified there is “no fee to submit a declaration with CFIUS.”
When assessing the value of a transaction to determine the fee, industry should calculate the “total value of all consideration paid by or on behalf of the foreign person that is a party to the transaction,” Treasury said, including cash, shares or “in-kind consideration.” Because the rule takes effect May 1, parties are only required to pay fees for a notice that is “formally filed” with CFIUS after that date. Treasury said CFIUS will not “generally” begin reviewing the transaction until after it receives payment for the fee.
CFIUS may waive portions of a fee or the entire payment if “extraordinary circumstances relating to national security warrant such a waiver,” Treasury said. Fee refunds are available in “limited circumstances,” such as when CFIUS determines the transaction should not be covered. The agency also clarified that parties are not required to pay another fee if CFIUS allows the party to withdraw and resubmit a notice, unless CFIUS “determines that a material change to the transaction has occurred or the filing contained a material inaccuracy or omission.”
Treasury said it decided to extend the public comment period to June after receiving comments requesting more time to review the changes due to the measures in place to mitigate the COVID-19 pandemic. Treasury stressed that it will begin collecting fees May 1 so that collections match the estimates for the fiscal year as closely as possible, but said it “recognizes the challenges posed by the coronavirus pandemic during the public comment period for the proposed rule.”
(Federal Register 04/29/20)