Wealthy Chinese citizens (and others) hoping to invest their way to a U.S. passport will soon need to pay more, as the price for America’s popular immigrant investment visa is set to rise later this year to $US900,000, from its current US$500,000.
This is, though, somewhat less than the US$850,000 increase – to US$1.35m – originally proposed in January 2017 by the Department of Homeland Security.
News of the proposed rise in the EB-5 investment visa, which allows foreign investors to put money into job-creating US projects in exchange for a Green Card, came in the form of final draft of rules last week by the U.S. Citizenship and Immigration Services (USCIS).
The changes marked "the first significant revision of the program's regulations since 1993," according to a informational notice distributed by the London-based law firm, Withers, which specializes in advising high-net-worth individuals on citizenship issues, and has citizenship experts on the ground in New York and Hong Kong to advise clients.
The changes are set to take effect on Nov. 21.
Published reports in the U.S. predicted a hectic next four months, as developers and foreign investors raced to beat the pending changes, some of which seek to shift major property developments – which have tended to be big beneficiaries of the EB-5 program up until now – away from wealthier developed areas of the U.S., such as around its major cities, and into more rural and distressed areas.
Under the EB-5 program, foreign individuals are eligible to apply for permanent residence in the U.S. if they make investments in a "commercial enterprise" in the country, as well as engage in the management of the enterprise by creating ten full-time jobs for U.S. citizens or permanent residents.
In addition to the rise in the minimum investor amounts, other key changes to the EB-5 program include:
• A rise in the minimum investment amount required for an EB-5 visa in conjunction with so-called "non-targeted employment areas," to US$1.8m from from US$1m, which, Withers notes, represents the first increase since 1990.
• The designation of TEAs going forward will now be "centralized to the Department of Homeland Security," although it will be USCIS's responsibility to designate certain geographic areas to be eligible for the lower investment threshold.
In a statement accompanying the announcement of the EB-5 visa changes, USCIS acting director Ken Cuccinelli noted that Congress had created the program almost 30 years ago "to benefit U.S. workers, boost the economy, and aid distressed communities by providing an incentive for foreign capital investment in the United States."
However, he went on, "since its inception, the EB-5 program has drifted away from Congress’s intent.
"Our reforms increase the investment level to account for inflation over the past three decades, and substantially restrict the possibility of gerrymandering, to ensure that the reduced investment amount is reserved for rural and high-unemployment areas most in need."
Press reports in countries in which the EB-5 visa is popular noted that the pending increase in the required minimum investment amounts is expected to result in a surge of applications by investors hoping to beat the price rise.
News of the proposed rise in the EB-5 investment visa, which allows foreign investors to put money into job-creating US projects in exchange for a “green card”, came in the form of new rules published late last month by the US Department Homeland Security (DHS).
The EB-5 program was originally launched in 1990, and is said to have generated more than US$5bn a year, while providing 10,000 visas to individuals who met the minimum investment amounts.
For decades it operated alongside another popular immigration visa program, that of Canada, which brought so many wealthy Chinese to certain Canadian cities, such as Vancouver, since it began in 1986 that it was blamed for helping to cause property prices in certain areas to soar, which ultimately resulted in Canada halting the program and even introducing measures recently to reduce the investment in Canadian residental property by foreigners.
In the U.S., the EB-5 program has come in for some criticism as a result of its being used more for projects in generally robust markets like Manhattan, rather than struggling, "rust belt" or rural areas.
Among the best-known projects to have benefited from EB-5 financing was that of the Hudson Yards development, on Manhattan's West Side.
An immigration and foreign investments specialist with the Philadelphia-based law firm of Saul Ewing Arnstein & Lehr was quoted as telling the Mansion Global news website last week that a 2015 Government Accountability Office study found only 3% of EB-5 investment went into rural areas, as opposed to high unemployment areas in urban centers.
The move by the U.S. to extract more money from those signing up to its immigrant investment visa comes at a time when growing numbers of countries are still introducing and promoting “citizenship by investment” schemes to lure investment, including Malta, Cyprus, and several countries in the Caribbean.
To read the USCIS's announcement on the pending changes to the EB-5 visa program, click here.
As reported here in February, the USCIS has also tweaked its so-called H-1B Visa Program, to give greater priority to immigrants seeking to work in the States who have advanced degrees from U.S. universities. That announcement was seen at the time as a fulfilment of a pledge made two years ago by President Trump to help Silicon Valley companies by prioritizing the most skilled applicants for these visas, and reducing the number of visas that were processed through outsourcing companies.
Click here to sign up to receive the American Expat Financial News Journal's free weekly news bulletin, and occasional breaking news bulletins
- Withers LLP: 'Does a U.S. revocable trust need to be registered under the UK's Trust Registration Service?'
- London-based Withers bolsters its U.S.-Canada cross-border practice in San Francisco
- Concerns over Sanders's proposed 'exit tax', as Dems' prez primary field shrinks to 2
- Smithfield market to be venue for annual London tax conference