EB5 Due Diligence
WHAT IS EB5?
The Immigrant Investor Program, also known as EB-5, has been created by the US Government to stimulate the U.S. economy through job creation and capital investment by immigrant investors. There are two EB-5 pathways for an immigrant investor to gain lawful permanent residence for themselves and their immediate family—the Basic Program and the Regional Center Pilot Program. Both programs require that the immigrant make a capital investment of either $800,000 or $1,050,000 (depending on whether the investment is in TEA or not) in a new commercial enterprise located within the United States. The enterprise in which monies are being invested must create 10 full-time jobs for qualifying U.S. workers within two years. EB5 programme is administered by USCIS.
Comments from Utsav Doshi: Most applicants have a perception that EB5 projects are government backed and therefore there is no risk as such. This is the biggest myth. The projects which are available for investment of your capital are EB5 eligible (as in they are identified by government as eligible to receive capital under the EB5 route). In essence, these projects are still like any other private project. The risk hence is enormous.
TOP 5 DO’S / DON’TS BY R K Doshi & Co LLP
In our experience, most applicants are so enthusiastic about this programme that they tend to forget and follow the basic protocols. Following must be done if you are a prospective EB5 applicant:
- DO a thorough financial due-diligence of the project or you may lose it all.
Obtaining citizenship and recouping your principal investment are two separate things. At times, applicants get their permanent green cards successfully while failing to recover their money. Unfortunately, in absence of proper professional guidance, we have seen applicant losing both – their investment amount as well as the right to obtain citizenship.
- DON’T get mesmerized by fancy project names
The projects available for EB5 investment range from residential apartments to exotic hotels to sports stadiums to QSRs like Dunkin Donuts, and to the other extreme being hospitals & healthcare facilities. You should not get excited only by the brand per se; get deeper into the project viability instead of narrowing your choice on the basis of your personal likes
- DO keep in mind Income Tax & FEMA regulations
An application under EB5 requires you to follow the US immigration laws. That said, you are still an Indian citizen, and would continue to be so for a foreseeable future. Therefore, complying with Indian laws cannot be overlooked. Under the LRS scheme granted by RBI, an applicant can take out only US$ 250,000 per person per financial year. The investment value under EB5 is however US$ 800,000. Also, you need to plan your income taxes because of the global taxation regime. A skilled Chartered Accountant who has the knowledge of US federal laws along with Indian regulations will be able to assist you from a long-term perspective.
- DO identify the source of your investment
One of the determining factors for USCIS to approve your application is the source from which you made the investment. While your net-worth may be in millions of dollars, however, if you do not have a legitimate source, or if you have a source of income but which can’t be substantiated enough to justify such a high-value investment, then we can write on a piece of paper that your applicant will go through a series of investigations by USCIS; and naturally the chances of your application’s success will get diminished. Your Chartered Accountant will help you identify the source and channel it bona fide to the investment.
- DON’T think that investing money means guaranteed visa
Last but not the least, don’t get misguided that once the monies are invested, you will certainly get a US citizenship or green card for that matter. Investing money is just the first step; the next steps would be to have your source of funding established (as highlighted in point 4 above), monitoring your investment apropos completion of work and creation of requisite jobs, and staying abreast with the changes in US immigration laws.
EB5 Immigration – US Citizenship
Our goal is to conduct analytics for assessing financial strength of any given project. An application under EB5 would go through the following timeline (this is for your educational purpose only):
Month 1
Retain a US based law firm. R K Doshi & Co LLP works with some of the oldest & largest law firms in USA which specializes in EB5 applications.
Month 2
Identify a project where you want to invest. R K Doshi & Co LLP conducts an exhaustive due diligence of projects on your behalf to ensure maximum safety of your investment made under the EB5 investment scheme. Our team will visit the project site, and do a comprehensive paper work by leveraging on our previous due- diligences in relation to EB5 investments.
Month 3
It would take 2 months to compile the information and complete I–526 application. In month 3, if all documents have been provided, an application will be filed on your behalf with the USCIS
Month 18
Confirmation of status of EB5 application, and granting of Provisional Green Card to the applicant on approval. An interview is arranged before granting of approval. It takes 3 months considering the wait time for interview
Month 21
Interview to be conducted at US Consulate office in India
Month 24
Enter USA with the immigration kit. Your Green Card will get activated at this stage. This marks the closure of one significant milestone in the entire process
Month 48
File for removal of conditions through I-829 petition
Month 60
Permanent Green Card could be received
Month 63
Get the refund of your investment (after approval of I-829)
OUR KEY DELIVERABLES IN YOUR EB-5 APPLICATION
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Adapting to your investment preferences; and performing a comprehensive financial due-diligence for selection of an optimal project
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On-site visit; understanding management abilities of the project owner
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LRS & FEMA advisory for foreign remittances & inbound receipts to ensure compliance with RBI Guidelines
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Post investment follow-ups; including on-site visits to check level of completion and financial check-points
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Ensuring the legitimacy of your funds and bringing it on paper (establishing the credibility of source of invested funds invested is the most crucial element in any EB5 application)
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Income tax implications post dual-citizenship, and ways to leverage on Indo-USA DTAA
Do note that only the main applicant needs to apply for EB5, and invest in a project. The other family members need not make a separate investment. For instance, if the husband has applied for US citizenship under EB5, then his wife as well as unmarried children under the age of 21 would automatically get the benefit and related status. Information given on this page is for your learning. It is the role of an attorney to offer you services on aspects related to immigration. Our responsibilities are to use our professional acumen in conducting Financial Due Diligence before you make an investment, plan for your taxes under Indo-US DTAA, and advice on FEMA / RBI to ensure FEMA compliances. Our endeavour would only be to safeguarding you from high risk projects by conducting forensic level investigation.