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Effective April 1, 2020, the Indian government will be levying a 5% tax on payments coming out of India. The ramification for Indian EB-5 investors is a cost increase of $45,000 for a targeted employment area (TEA) investment and $90,000 for a non-TEA investment.
The EB-5 program provides a route for individuals and families with the means to invest in U.S. enterprises to become U.S. permanent residents. India has the second-largest number of investors in the EB-5 program—the only country with more investors is China.
To avoid paying the additional $45,000 or $90,000 in taxes on top of the existing costs of an EB-5 visa, Indian EB-5 investors can move their capital to a U.S. escrow account prior to April 1. Transferring capital to a U.S. escrow account does not mean that an Indian EB-5 investor needs to immediately decide on a project to invest in. The funds can remain in the escrow account until the investor has completed his or her due diligence on the project of choice and is ready to proceed. Given that the new 5% tax will go into effect in April, it is essential that Indian EB-5 investors act now if they wish to avoid it.
