While Elon Musk is certainly the most famous South African to move his business interests to the United States, he’s far from unique in this area. Dozens of South African professionals and entrepreneurs have immigrated to the States over the years to take their businesses front and centre of the global stage, but with immigration laws set to change in the coming months the window of opportunity is narrowing rapidly.
Immigration experts are predicting a change in the qualifying criteria of the US programme which many businessmen have used, known as the EB-5 visa. Currently, entrepreneurs are eligible to apply for a green card if they invest a minimum of $500 000 within an employment area that the US government has specified while directly or indirectly creating 10 permanent full-time jobs for qualified US workers.
In a recent interview with Los Angeles-based South African immigration attorney, Bernard Wolfsdorf, Fin24.com gathered information both on the current foothold open for local businessmen and the impending changes. In short, the US government is set to raise the capital investment from the current figure of $500 000 to $1.35 million, almost tripling it overnight. Said Wolfsdorf, “That would make this option very difficult for even the high net worth folks, so there is a narrow window of maybe only a few months for those seeking to immigrate via the programme.”
“It’s less of an investment than an interest free loan,” Wolfsdorf said. “If you do due diligence, most of the projects involve five or six-year loans and most of the good projects give you a 0.25% return. A critical aspect is to ensure the loan is adequately collateralised and not to seek high returns in the EB-5 programme. The reason is simple, bank loans are available at relatively low rates so if EB-5 is offering good returns, what is the catch?” asked Wolfsdorf.
Due to several cases of abuse the US Congress appears set to increase the investment by South African businessmen wanting to move their interests across. This means that if you have a serious interest in doing so, but were waiting for a more favourable moment, that moment is right now. To put it in perspective, according to the current exchange rate, the price to move your business there will increase from 6.36 million rand to a massive 17.6 million rand, and that’s only for the visa.
Paying taxes in two countries is also a concern for most entrepreneurs but there are many loop holes in the US tax code for business. If you’ve been following these developments and have decided to take immediate action before the price escalation remember to contact expert tax and immigration lawyers in South Africa to give yourself and your business every advantage.