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South African EB-5 US Green Card applications triple ahead of deadline

16 Oct 2019

Applications for the EB-5 US Investor Green Card Program requiring a minimum of USD 500 000 (approximately R7.5 million depending on exchange rate) have more than tripled and are up by 346%.

Image: New York City skyline. An American passport is one of the most desirable, offering visa free travel to over 180 countries.

This is according to Nadia Read Thaele, Director of LIO Global, a specialist firm in Residence and Citizenship by investment programs, who says this is ahead of the expected increase in the required minimum from USD 500 000 to USD 900 000 (approximately R14 million).

The US remains a top choice for emigration and the program offers a relatively easy route to citizenship within a five year period. A main benefit is that candidates can retain their SA citizenship as the US permits dual citizenship, she says. There is also no language, age, education, managerial or skill requirements.

An American passport is one of the most desirable, offering visa free travel to over 180 countries. While investment into residency programs over the last five years as a ‘Plan-B’ option and to gain easier access to international destinations for business and leisure has risen notably, the rising pessimism about the economic future in the country has accelerated emigration and residency program applications over the last year, she says further.

Most applicants are concerned about their children and a big advantage of the program is access to top quality education as children can study at US universities at same rates as US nationals.

The program allows family investors to include their spouse and unmarried children (under the age of 21) in their application and the investor and his/her immediate family may live, work or start a business anywhere in the US.

The EB-5 program is operated by United States Citizenship and Immigration Services (USCIS) and offers two investment options:

Option 1:  Create a New Enterprise - invest USD 1 million (approx. R15 million) in a new commercial enterprise, or USD 500 000 (approx. R7.5 million) in a targeted employment area (can include certain rural areas and zones with low unemployment).  Must employ at least 10 qualified US workers in direct employment and the applicant must actively manage the policy formation and day-to-day activities of the enterprise.

Option 2: Invest in a Regional Centre - by far the most popular. Invest USD 500 000 (approx. R7.5 million) in an at-risk US job-creating centre which creates employment for at least 10 US employees. There is no requirement for day-to-day management and can instead elect to be a policy-maker. Only centres approved by the USCIS qualify, which makes it easier for the investor since the centre would already have demonstrated its job creation. 90% of US Eb-5 applicants select this option.

Read Thaele says the US has a complex immigration process with stringent requirements. Prospective candidates should work with credible consultants, preferably someone local and must seek professional advice with respect to financial emigration and tax planning.

One aspect to bear in is that the EB-5 investor’s capital investment is placed “at risk” with no guaranteed return and hence in-depth due diligence should be done.

The two biggest risks in the process involve choosing a Regional Centre that has a strong reputation and track record in returning funds to investors, and secondly investing in a Regional Centre that meets the requirements of the program. If the Regional Centre chosen does not meet the requirements, you won’t get your green card, she says.

For wealthy South Africans an investment of around R7.5 million to R16 million is often less than the cost of a second property and is now seen as an excellent investment option, she says. We are even seeing parents who do not wish to live in the US but would like their children to have the opportunity to live and study there, gifting the funds necessary to their children to participate in the program.

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