Indian EB-5 Investors Will Be Subjected to a New Remittance Tax in April 2020

Indian EB-5 investors will have a new obstacle to wrestle with come April 1, 2020: a new 5% tax on remittances out of India, announced recently by the Indian government. Given the size of EB-5 investments—$900,000 for EB-5 projects in a targeted employment area (TEA) and $1,800,000 for projects outside of a TEA—this 5% tax could be costly for Indian investors, forcing them to pay an extra $45,000 to $90,000.

Nonetheless, the EB-5 visa program remains one of the best ways Indian nationals can obtain green cards for the United States for themselves and their family. Recently, more and more Indians have been participating in the EB-5 program, and the country is slowly starting to catch up to China in terms of EB-5 dominance.

Indian EB-5 investors can’t entirely escape paying taxes on the capital they transfer to an EB-5 project, but if they act fast and move their EB-5 funds to a U.S. escrow account before the end of March 2020, they can save the additional $45,000 or $90,000.

Transferring funds to a U.S. escrow account does not mean Indian EB-5 investors need to quickly invest in an EB-5 project—the funds are safe in the escrow account until they select an EB-5 project and decide to proceed. This allows Indians to store their capital safely in a U.S. account while carefully combing through the project documents of their preferred EB-5 project and assessing its risks. Any Indian EB-5 investors wishing to save the $45,000 or $90,000 on their remittance must transfer their funds quickly, however.