Pursuant to the International Investment and Trade in Services Act ( the “Act”), the BEA conducts, among other things, five-year benchmark surveys with respect to foreign direct investments in the United States. A response to the survey by subject companies is required on Form BE-12. The 2017 Form BE-12 is due on May 31, 2018 or June 30, 2018 if the BE-12 form is eFiled.
Form BE-12 is mandatory for any U.S. entity where 10% or more of the U.S. entity’s voting interests are owned, directly and/or indirectly, by one or more foreign persons (in the broad legal sense, including a company). Smaller businesses should be aware that there is no minimum assets or revenue threshold for the BE-12 filing although a US company with assets, sales, gross operating revenues, or net income below certain thresholds may file a BE-12 form ( BE-12B or BE-12C) calling for less information about the US company and/or the foreign parent.
The BEA has sent a letter to those US entities that had previously filed reports with the BEA disclosing ownership by foreign persons meeting the ten percent threshold notifying them of the BE-12 filing requirement However, the BEA has made it clear that the Form BE-12 is mandatory for any US company meeting the 10% foreign ownership threshold, whether or not they received such a letter.
The Act provides that such reports are confidential and may be used only for analytical or statistical purposes and cannot be used for purposes of taxation or regulation.
An entity that fails to file a required Form BE-12 may be subject to civil penalties and, if found to have willfully failed to file a required Form BE-12, may be subject to criminal penalties. An officer, director, employee, or agent of an entity who knowingly participates in a willful failure to file may also be subject to criminal penalties.
It is our understanding that in the past the Department of Justice has not been aggressive in seeking such civil or criminal penalties.
Mark D. Wigder is in the process of assisting US subsidiaries of foreign parents prepare a Form BE-12C, and is familiar with the Form BE-12s and the applicable regulations. He can get you copies thereof and related information.