The US Bureau of Economic Analysis (‘BEA’), an agency of the US Department of Commerce, monitors inbound and outbound US investments as part of its regulatory mission of tracking international commerce.
To help fulfill this mission, the BEA conducts ‘benchmark’ surveys every five years. A benchmark survey of interests abroad held by US persons is due by May 29, 2020. The BEA imposes mandatory reporting obligations upon:
- US persons and businesses holding a (direct or indirect) 10% or greater interest in a foreign business enterprise; and
- US business enterprises that are themselves (directly or indirectly) 10% or more foreign owned.
This reporting is not the same as the reporting that may be required by the Internal Revenue Service. The BEA reporting does not involve taxable income but more detailed, company information. Supplemental quarterly and/or annual reports may also be required if requested by the BEA.
In addition to the benchmark survey mentioned above, a survey of new foreign direct investment in the US must be filed within 45 days of the transaction if there is a 10% or greater foreign ownership and the investment is over $3 million. (If the investment is under $3 million - but 10% ownership - a claim from exemption form must be filed to avoid a lengthier form.)
There are both civil and criminal penalties for failure to comply. Civil penalties can run as much as $48,192. That said, it is our understanding that up to now, the BEA has mainly resorted to encouragement and direct contact with companies to assure compliance. The threat is the penalties if encouragement does not work.
If you need assistance, you should speak with legal counsel or the specialty compliance firm with whom you work on these types of regulatory matters. If you do not have such an advisor and are unable to locate one, please feel free to contact any MooreDM professional for a referral to a qualified professional services firm.
This summary communication is informational only and does not constitute advice from us to you nor does your receipt of this communication constitute an engagement of us on matters relating to this communication or any other matter.