Five Key Issues of Importance in Preparing EB-5 Source of Funds for Vietnamese Investors
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- Currency Restrictions: Vietnamese laws regulate the export of Vietnamese currency abroad. This makes it difficult for investors residing in Vietnam to transfer funds to the United States for EB-5 investment accounts. To facilitate their EB-5 investment, Vietnamese investors typically use a credit institution to transfer currency abroad. In the EB-5 petition, the investor must provide evidence of each deposit and transfer to the credit institution, along with supporting documentation from the credit institution, such as licensure and control policies, to show the trace of funds originating with the investor, through the credit institution, and into the U.S.-based EB-5 investment.
- Taxes on Individuals: The new EB-5 law requires seven years of tax returns. In Vietnam, tax on employment income is paid directly by the employer and filed by them with the government. This needs to be fully documented by tax receipts. For non-employment income, such as income resulting from investment, sale of property, etc., the individual is required to pay personal income tax in relation to each type of taxable non-employment income (essentially, each time income is received). Individuals are taxed on real property and the investor must provide proof of tax payment in purchase and/or sale of property, and taxes during duration of ownership.
- Gifts of Real Property: Some Vietnamese investors receive land and homes as gifts from family and friends. In such cases, aside from the contract gifting the land, the investor must show the giftor's original ownership of the land. Without evidence of the giftor's original ownership of the land or home, USCIS cannot confirm the giftor was legally able to gift the property.
- Real Estate Appreciation: Some Vietnamese investors sell or mortgage real property as the source of the investment. Sometimes the underlying real estate appreciates in value quickly and considerably after the time of purchase. It is a best practice to demonstrate how property values have increased in Vietnam to help prove the sale or mortgage of a real estate asset was legitimate.
- Source of Funds Relating to Shares of Company or Company Proﬁt Distribution: Specific evidence must be provided for investors who own shares in a company and wish to cash out shares, or a company that will make a profit distribution where the investor is an owner. For the EB-5 petition, the investor will need to show documentation reﬂecting acquisition of shares and their ownership, bank statements showing movement of funds, annual reports showing earnings, and company ownership. If the sale of stock is subject to tax liability, the investor must provide proof of payment of applicable taxes related to the same. If the funds result from a profit distribution, the investor must provide documentation concerning the company decision to make a profit distribution, evidence of the investor's receipt of funds, and proof of payment of applicable taxes related to profit distribution.
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