For generations, the economies and cultures of the United States and India have been intertwined. Immigrating Indians have helped to make the U.S. a global leader in such fields as science, medicine and technology, while at the same time, they’ve prospered to bring themselves and their families financial security and a comfortable lifestyle in America. The immigration bonds between the two countries have never been stronger. According to the Migration Policy Institute, Indian immigrants now make up about 6% of the U.S. foreign-born population and are the second-largest immigrant group in the U.S. And despite recent turmoil in the U.S. tech industry – or perhaps because of its ripple effect on H-1B visas — demand for U.S. green cards through the EB-5 visa program increased dramatically in 2022 over the previous year. Why this surge of interest and why should Indians interested in a U.S. green card be thinking hard about EB-5 right now? Several factors are creating a perfect storm of EB-5 interest.
The H-1B dilemma:
Indians who have used, or who are thinking about using, the H-1B visa to work in the U.S. have seen the sobering headlines of mass layoffs in the U.S. tech sector. Workforce reductions have placed unforeseen pressures on these workers to find new jobs within a short period of time (60 days) to meet the visa requirement of continued employment or leave the country. Even by having the fortune of finding new employment (and a new employer sponsor) within that 60-day period, H-1B holders are recognizing uncertainties of this visa, for both the holder and their families, that were not as evident before the recent waves of tech downsizing.
Changing visa status with concurrent filing:
Under a new U.S. law – the EB-5 Reform and Integrity Act (“RIA”) of 2022 — visa holders are now eligible to change their status to the EB-5 visa, which doesn’t have the same restrictions and limitations that are found with the H-1B visa.
The new law allows individuals who lawfully reside in the U.S. to file an application to adjust their visas status to that of a lawful permanent resident (Form I-485) concurrently with the filing of their EB-5 petition (Form I-526E), which allows applicants to remain in the U.S. while their immigration applications are pending.
Not surprisingly, CanAm Enterprises found that Indians used concurrent filing to change their visa status in 2022 to EB-5 at double the rate of 2021.
The bedrock that is the U.S. education system:
Parents are one of the highest applicants of EB-5 visa (for the U.S.) from India. Parents often invest in the program to give their children a secure future in the U.S., an educational path to a high-income career, with a faster access to a green card. EB-5 also can entitle Indian families to the lower tuition rates paid by U.S. families.
Additionally, high-net-worth individuals, including business owners, entrepreneurs, and professionals such as doctors and engineers are also enthusiastic applicants, as they are able to pursue advanced degrees and licenses in their field through studying at some of the world’s best universities, located in the U.S.
Better Protection and Transparency for EB-5 Investors:
Despite their unique nature, EB-5 investments are securities, treated the same as stocks, bonds, or more traditional financial instruments. The new integrity rules of the RIA mirror many of the rigorous regulatory requirements of FINRA (Financial Industry Regulatory Authority) and the SEC (Securities and Exchange Commission) designed to combat and weed out bad actors in the industry.
As the CEO of a FINRA-registered broker-dealer, I applaud these protections. The new rules also now provide for a policy already implemented at CanAm: retaining a third-party fund administrator to track EB-5 capital transactions in real-time. This practice provides an added layer of transparency, confidence, and security for investors.
With surging interest in EB-5, investors should exercise more due diligence than ever in choosing the right regional center for their EB-5 needs. At the core of every investment is the project offering. CanAm collaborates with what we find to be best-in-class borrowers to offer investors successful projects that meet their immigration and investment goals and fully comply with USCIS requirements.
The looming tax increase on outbound funds:
In its union budget for 2023, the Indian government unveiled several new restrictions that would affect EB-5 investments coming through India’s banking system, including higher taxes on outward financial transfers from the nation, such as international investments.
The income tax on outgoing transfers would apply to EB-5 investments and include a 20% tax-collected-at-source (TCS). This tax is expected to start taking effect on July 1, 2023. This would be a significant rise compared to the current TCS rate of 5%. While the tax can be reclaimed on tax returns, the most reliable strategy to avoid the 20% TCS is to start the transfers before the deadline of July 1, 2023.
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