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How can investors from Middle Eastern tax free havens participate in the EB-5 program?

Some of the Middle East Countries such as the UAE, Qatar, and Kuwait are known to have zero percent income tax. One is allowed to have a free flow of business funds in and out without restrictions or tax consequences. Bookkeeping is not mandatory. Yet EB-5 adjudicators do not appear to know this fact and keep asking for documentary proof that is not relevant, does not exist, or is not available in these countries. They need to keep themselves updated with laws of such tax free countries, especially when the EB-5 program is meant to attract global investments. What should EB-5 investors from these Middle Eastern countries do when faced with such problems?

Answers

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    Clem Turner

    Securities Attorney
    Answered on

    If you want a referral for an immigration tax consultant, please contact me. Together with an immigration attorney, they may be able to figure out a way to resolve the "Catch 22" situation you describe.

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    Julia Roussinova

    Immigration Attorney
    Answered on

    It is really important that you discuss your specific situation with an immigration attorney before you commit investing through an EB-5 program. One of the key requirements is to prove the required investment comes from a lawful source of funds. One of the types of documents required is the tax returns; however, there are alternate types of documents that may be gathered to prove the legal source of funds. Tax opinion from a licensed tax professional or tax attorney from a country of origin will also help establish your home country''s income tax requirements and that no income tax regime exists.

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    Michael B Dye

    Immigration Attorney
    Answered on

    USCIS requires that investors prove that the source of the invested capital is "lawful," and that the investor has a "level of income" or has accumulated sufficient wealth that would enable the investor to invest. All claims to the source of funds must be properly and thoroughly supported with documentary evidence of how the money was earned. Common financial documents used to satisfy these requirements include tax returns. However, if tax returns are not available, there are a variety of other ways to successfully meet the lawful source of funds reporting requirements. The investor should speak with a qualified immigration attorney to discuss his or her unique situation.

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    Mona Shah

    Immigration Attorney
    Answered on

    Add an affidavit or report from an expert in the Country on question to the submission.

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    Lei Jiang

    Immigration Attorney
    Answered on

    Maybe explain the situation and just provide as many documents as you can. It''s really the U.S. law, not laws in the Middle East Countries, controls.

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    Lynne Feldman

    Immigration Attorney
    Answered on

    The burden is on the investor and their attorney to show that the funds were earned from a lawful source. Often the easiest is to show property or a business being sold, bank records showing money into and out of accounts. Just because no taxes were paid doesn''t mean the business doesn''t have any records of wages or distributions paid to you.

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    Jinhee Wilde

    Immigration Attorney
    Answered on

    Since the EB-5 rules require that the source of funds of the investor be tracked and documented and that an eligible EB-5 investor show either income earning of $250,000 for the past 3 years or assets of $ 1 million, you cannot get around this rule. While I share your frustrations about USICS adjudicators not understanding different country?s rules, we must follow the rules albeit bureaucratic if you want your case approved. Although these countries do not require careful accounting or tax reports, you will need to provide an audited financial statement in lieu of the tax reports. It would be advisable to use a globally recognized auditors like Deloitte or Price Waterhouse as they operate in those countries and are familiar with U.S. accounting as well as those countries.

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    Karen Weinstock

    Immigration Attorney
    Answered on

    The investor has a burden of proof to prove the funds were accumulated in a legal manner, for example through business, investments, etc. It is more difficult to prove in countries where people do not file tax returns etc., however it is still possible. You should contact an attorney to help you in gathering this type of evidence.

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    Taher Kameli

    Immigration Attorney
    Answered on

    They can participate by providing audited financials from an accountant.

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    Anthony Ravani

    Immigration Attorney
    Answered on

    I do EB-5 for Middle eastern people all the time very successfully. It is the attorney that makes a difference on how well he/she is aware of these situations and how well he/she is able to prepare the case.

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    Sufen Hilf

    Immigration Attorney
    Answered on

    The best way is to submit official documents from these countries stating there is no tax filing requirement for business or personal.

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    Christopher Jaensch

    Immigration Attorney
    Answered on

    In an EB-5 application, the investor must prove the source of his or her investment funds. Generally, the USCIS wants to see the last five tax returns from the country where the investor lives. If the investor lives in a country where there are no income taxes, then the USCIS would likely accept alternative evidence to show source of investment funds. This could include a detailed explanation about how the investor earned his or her funds, business profit and loss statements, real estate purchase and sale documents, proof of inheritances, etc.

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    Philip H Teplen

    Immigration Attorney
    Answered on

    Middle Eastern investors from zero income locations can absolutely participate in the EB-5 program. It is just an additional burden in showing lawful funds. This is done with documentation of the local tax free location, business records and certified statements from accountants and related professionals. The idea is not to assume that Immigration knows anything. The application is a blank page and we must supply all the information to qualify the applicant both in terms of legality of funds and project qualification.

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    Ed Beshara

    Immigration Attorney
    Answered on

    All foreign national investors can prepare I526 petitions for filing and attach supporting documentation showing the authentication and legal source of funds.If certain documentation, such as tax forms , etc, are not available then the investor may prepare a Declaration (Affidavit), under penalty of perjury to support the lawful source of the personal investment funds.

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    Edward Litwin

    Immigration Attorney
    Answered on

    The burden of proof is on the investor. Actually having to file tax returns is a blessing in disguise. These forms are easy ways to prove the source of funds. For those that do not have such records, the documentation is MUCH more difficult and expensive to accumulate. I suppose the adjudicators cannot keep up with the government paperwork requirements of all the 280+ countries in the world, so they fall back on familiar wording. Again, the burden of proof is with the investor. DHS can make suggestions, but if they are not relevant, then the investor will have to find alternatives. This is something that you should really discuss with an immigration attorney. Before investing or spending a lot of money, you should meet with an attorney. I trust this helps.

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    Lana Kurilova-Rich

    Immigration Attorney
    Answered on

    One of the requirements of the EB5 program is to show the source of funds. It is up to the prospective investor to show to the U.S. authorities that the money being invested came from legitimate sources. I can certainly understand that not every country has the record keeping requirements such as the U.S. does, however, one way or another, sufficient documentation must be provided to convince the adjudicators that the funds came from legitimate sources, such as legitimate business or legal sale of property, etc. If the source of funds cannot be ascertained with documentation, I am afraid that this will be a stopping point for the prospective investor. The reason for this rule is that, while the U.S. does want to attract legitimate investment capital, it wants nothing to do with illegal sources of money, for example, drugs, prostitution, terrorist activities, etc., etc. For this reason, the requirement is that the U.S. wants to have conclusive proof of where this money came from before it will allow this investment for the purpose of EB5 program. My recommendation is to work closely with your attorney and obtain whatever documentation is realistically possible that would satisfy the adjudicators. Ideally, this issue should be discussed with your attorney before you even commit to this program, so that you know exactly what the rules are and whether you are able to comply with them. These rules are basically ?set in stone? and cannot be bent on a case-by-case basis, regardless of a country or a situation. Thus, again, my advice is to work with your attorney who should help you think through this process and determine what documents can be obtained to satisfy this requirement. There is no way around this requirement.

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    Steven Anapoell

    Securities Attorney
    Answered on

    The key is to be able to demonstrate lawful source of funds. Tax returns are not the only way to demonstrate lawful source of funds. You should consult an expert conversant with your particular situation. My colleague Kate Kalmykov will be in Dubai later this month to address these and other issues.

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    Neville M Leslie

    Immigration Attorney
    Answered on

    There is nothing you can do if you cannot show the source of the funds.

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    Bita Hamidi

    Immigration Attorney
    Answered on

    Lawful source of funds documents are prepared on a case by case basis-Nationals of Middle Eastern Countries that you have mentioned participate in the EB-5 program regularly.

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    Shahzad Q Qadri

    RC Creator
    Answered on

    The State department is well aware of tax free zones. Often the RFEs are ''boiler plate''. When sourcing funds you have to provide a paper trail and that does not necessarily mean tax returns. Unfortunately, in order to answer the question in more detail we would have to review the request. However, we have been successful in tracing fund without tax returns, as such that is in fact possible.

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