The U.S. Department of Commerce Bureau of Economic Analysis (BEA) recently proposed to raise the exemption threshold for Form BE-605 reporting from the current $30 million to $60 million, which, if implemented, would qualify more businesses for exemptions and significantly reduce the filing burden of these businesses. The BEA also proposed to do away with the existing distinction between banks and non-banks as to the required Form BE-605 filing. U.S. business entities in which a foreign person acquires ten-percent-or-more voting interest or equivalent interest in an unincorporated entity should comply with the BEA filing requirements to avoid any civil or criminal penalties.
The BEA administers a series of surveys of foreign direct investments in the United States. A U.S. business receiving investments from foreign natural or legal persons could be obligated to file quarterly, annual and five-year reports with the BEA unless it has filed for the proper exemptions. The reports to the BEA are confidential and can only be used for analytical or statistical purposes. U.S. businesses that fail to file the BEA reports may be subject to civil or even criminal penalties.
However, the BEA mandatory reporting is relatively unknown to many U.S. companies—and BEA enforcement has been lax in the past. Very few companies (if any) have been penalized for failing to file with the BEA.
To help U.S. companies determine whether they are required to file, 2009 BEA reporting requirements are provided below.
Who Must File Any U.S. business entity ("reporting affiliate") in which a foreign person acquires or controls, directly or indirectly, ten percent or more voting interest or equivalent interest in an unincorporated entity, whether through creation of a new U.S. business enterprise, acquisition of an existing U.S. business, or purchase of U.S. assets or real estate, must file mandatory reports or a claim for exemption with the BEA. The reporting affiliate must file separate BEA reports for each foreign person who, directly or indirectly, owns ten-percent-or-more voting interest in the reporting affiliate.
Types of Reports to Be Filed With the BEA Form BE-605 Quarterly Report.The reporting affiliate must file Form BE-605 (non-bank businesses), or Form BE-605 Bank (U.S. banks or affiliates) with the BEA every calendar or fiscal quarter. Depending on whether the foreign voting interest in the reporting affiliate is direct or indirect, the reporting affiliate...