Following two amendments to the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) published on January 17, 2020, the Department of the Treasury released a proposed rule that would establish a filing fee for parties engaged in covered transactions under the Committee on Foreign Investment in the United States (CFIUS or the Committee).
The Department of the Treasury makes it a direct and easy way to calculate the filing fees, which is determined by the transaction’s value. Worrying about discouraging filing and negative impacts on small businesses, the Treasury Department sets the filing fee no more than 0.15% of the overall transaction value.
For transactions with values less than $500,000, there are no filing fees. For transactions with values equal to or exceeding $500,000, the filing fee is based on a tiered approach:
Where the value of transaction is equal to or greater than $500,000 but less than $5,000,000: $750;
Where the value of transaction is equal to or greater than $5,000,000 but less than $50,000,000: $7,500;
Where the value of transaction is equal to or greater than $50,000,000 but less than $250,000,000: $75,000;
Where the value of transaction is equal to or greater than $250,00,000 but less than $750,000,000: $150,000;
Where the value of the transaction is equal to or greater than $750,000,000: $300,000.
The proposed regulation released by the Department of the Treasury, authorized by FIRRMA, finally terminates the era of free view—CFIUS reviewed transactions without any fee for the last 30 years. Although the Department of the Treasury believes that the coming filing fee is too little (no more than 0.15% of values of transactions) to discourage filing and to affect small business, foreign persons engaged in “covered transaction” or “covered real estate transaction” must pay extra expenses to the U.S. federal government. Under the proposed rule, only submitting voluntary written notice to the Committee is subject to the filing fee, filing declarations and unilateral review of a transaction based on agency notices are still free of charge. Unfortunately, filing fees are inevitable if Committee requests parties who issued declarations to submit a written notice where the Committee is unable to have a conclusion.
*The Department of the Treasury is going to collect comments on this proposed rule from March 9, 2020, for 30 days. This filing fee rule may be amended after the reconsideration of the Treasury Department.