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It’s undeniable that more South Africans are taking advantage of the EB-5 (employment-based, fifth-preference) immigrant investor program, which provides an investor’s entire family with United States green cards based on the creation of jobs for US workers. With no age requirement or need for a U.S. sponsor, the EB-5 visa has quickly become a popular visa option for those seeking an easier life in America with more educational and employment opportunities for a family’s future.
However, new regulations that will substantially increase the minimum EB-5 investment amount have been published in the Federal Register, with an effective date of November 21, 2019. The proposed changes will price out many South Africans seeking to obtain permanent residency within the United States through the EB-5 Visa Program. Many South Africans are rushing to get their immigration applications filed prior to the effective date to demonstrate eligibility based on the regulatory requirements in place at the time of filing of the petition.
Right now, the minimum investment amount is set at $500,000 for investments in “Targeted Employment Areas” (TEAs), and from $1 million for non-TEA investments. The new regulation would increase the minimum investment amount to $900,000 in a TEA, and to $1.8m for non-TEA. Additionally, this amount will automatically increase every 5 years to account for inflation.
Another major change is that the authority to designate a geographic location as a TEA has been moved from state governments to the federal government – a change that would cause significant delays and additional costs to EB-5 projects and investors.
The time to invest at the current investment amount of $500,000 has come to an end. In order to be eligible, an EB-5 investor must demonstrate the lawful nature of the EB-5 investment capital as well as the transfer of funds out of country in compliance with the South African Revenue Service. Liquidating assets can take time, and there is no time to lose now.
During our firm’s last trip to South Africa in May and June, Wolfsdorf Rosenthal LLP Partner Joseph Barnett noted the daily discussion with clients surrounding currency exchanges. With significant capital needed for EB-5 eligibility, the volatility in ZAR currency exchange rates affects an EB-5 investor’s ability and opportunity to transfer foreign exchange and international remittances out of South Africa, and it was clear that a prudent EB-5 investor would work through a professional money transfer service – as well as engage in pre-immigration tax strategy with experienced international financial advisors – prior to filing the EB-5 immigration application.
Wolfsdorf Rosenthal LLP Partner Joseph Barnett will be in South Africa from August 21-28, 2019 to meet with prospective EB-5 investors. To schedule a no-cost EB-5 consultation, please register at https://www.eb5greencard.co.za/.
