Glossary

Foreign entity of concern (FEOC)

The older term for companies tied to China, Russia, Iran or North Korea, first set out in the 2021 infrastructure law and used for the electric vehicle credit. Many people still say FEOC when they mean the newer prohibited foreign entity rules in the clean energy tax credits.
Why it matters: knowing which rule applies avoids talking past each other.

Prohibited foreign entity (PFE)

The 2025 tax law's umbrella term. A company is a prohibited foreign entity if it is either a specified foreign entity or a foreign-influenced entity.
Why it matters: projects and factories claiming 45X or 48E can be affected if the claimant is a PFE or gets too much material assistance from one.

Specified foreign entity

A company that sits on certain US government lists, or that is owned or controlled by the government of a covered nation, among other cases set out in the law.
Why it matters: this is the most direct link, and it usually shows up in public lists and company records.

Foreign-controlled entity

One kind of specified foreign entity: for example, the government of a covered nation, including regional and local governments, and agencies or bodies acting for them.
Why it matters: ownership traced to a provincial or city government body can count, not just the national government.

Foreign-influenced entity

A company that isn't on a list itself but is tied to a specified foreign entity: for example, one can appoint a senior officer, or one owns 25% or more. Combined foreign holdings, debt held by such entities, and certain contract payments that give effective control can also count.
Why it matters: this is where ownership and control research matters most, because the links are often several layers up a corporate chain.

Covered nation

China, Russia, Iran and North Korea, the countries named in the rules.
Why it matters: ownership or control traced back to these governments, or to entities tied to them, is what the rules look for.

Effective control

Rights held by a specified foreign entity, mainly through licensing and similar contracts, that let it steer how a facility is run, what it makes or where it buys, even without owning it. Treasury's first guidance (Notice 2026-15, February 2026) says each type of licensing arrangement listed in the law is assessed separately, and more rules are expected.
Why it matters: control can exist with no ownership at all, so a clean shareholder list isn't enough on its own.

Material assistance

Help from a prohibited foreign entity in making a component or building a project, measured through the cost of what came from those entities.
Why it matters: too much material assistance can reduce or remove a 45X or 48E credit.

Material assistance cost ratio

The share of a product's or project's direct costs that did not come from prohibited foreign entities. It must meet a minimum that rises year by year.
Why it matters: accounting firms usually test this ratio, but it doesn't by itself tell you who owns or controls a supplier.

45X

The advanced manufacturing production credit, paid per unit for clean energy components made and sold in the US, including battery cells and modules.
Why it matters: battery makers claiming 45X face the PFE rules on their own ownership and on their inputs.

48E

The clean electricity investment credit, which covers clean power projects and energy storage.
Why it matters: storage developers and owners claiming 48E need to know where their batteries and key parts came from.

Beginning of construction

The date work on a project is treated as having started for tax purposes. It decides which version of the rules applies.
Why it matters: projects that began construction earlier may face different requirements.

Supplier certification

A signed statement from a supplier about where its products and inputs came from, which the law lets buyers rely on when working out the material assistance cost ratio.
Why it matters: reliance has limits. A buyer that knows, or has reason to know, a certification is wrong can't rely on it.

Reason to know

The idea that a buyer is expected to act on information it had or could easily have found, such as public ownership disclosures or financing terms.
Why it matters: public records that point to foreign ownership or control can create a duty to look further.

Beneficial ownership

Who really holds the power to vote or sell shares, even when they're held through other companies, funds or nominees.
Why it matters: the name on a share register is often not the real owner.

Ultimate parent

The company or person at the top of a chain of ownership, with no one above it.
Why it matters: the rules look through layers of holding companies, so the trail has to be followed to the top.

Notice 2026-15

The first Treasury and IRS guidance on the prohibited foreign entity rules, released 12 February 2026. The law requires safe harbor cost tables by 31 December 2026, and proposed regulations on who counts as a prohibited foreign entity are expected, with no date announced.
Why it matters: the rules are still being filled in, which is why well-documented evidence matters.

Evidence and findings

What Battery Pulse delivers: the public records we found, how they connect, and what they show, with a label for how strong each finding is.
Why it matters: it supports, but doesn't replace, your counsel's and tax adviser's judgment.

General information, not legal or tax advice. Definitions summarize public law and Treasury and IRS guidance as of November 2026.