HNIs rush to consultants over Donald Trump's plan to replace EB-5 visa with 'gold card'

Trump Announced last week that he was replacing the EB-5 Visa with Gold Card program.

The Big Four consultancy firms are flooded with queries on the impact of US President Donald Trump’s plan to overhaul immigration rules, people with direct knowledge of the matter have said.

Wealthy individuals are concerned about the impact of the new immigration policies Trump plans to implement, including replacing EB-5 visas, which grant green cards to non-residents who invest a specified sum of money in the US.

The EB-5 Visa is available to any foreigner willing to invest $1.05 million (Rs 9.17 crore) and hire at least 10 employees in the US. If the investments are being made in economically distressed sectors, the limit is $800,000 (Rs 6.99 crore). The visa provides for permanent residency to the applicant and their dependents.

Earlier this week, Trump announced that he planned to replace the EB-5 Visa with a new visa named “gold card” which provides all the benefits of permanent residency. However, the investment requirement for the “gold card” at $5 million (Rs 43.7 crore) will be much higher than for EB-5.

Many high net-worth individuals (HNIs) who have gone the EB-5 route are concerned that their visa could be revoked, the people cited above added. Trump announced plans to replace the EB-5 visa following concerns about misuse of the route by non-residents. The HNIs are also concerned if there would be any probe into the existing EB-5 visas.

Also read: How does Donald Trump's 'gold card' plan stack up against other 'golden visas'?

“Many HNIs are asking if their existing EB-5 is sufficient or do they need to convert their visa into the newly announced gold card which would require the non-residents to cough up more capital,” said a partner at a Big Four consultancy firm. “Some of the individuals who were planning to obtain the EB-5 Visa soon and had undertaken all the compliance work are confused as to what is the way ahead since they may have to fulfil higher investment commitment.”

The immigration queries being received by the consultants are not just limited to wealthy individuals. Even some of the companies are reaching out with queries, the sources said.

It is a common practice among smaller Indian firms with a presence in the US to hire Indian nationals in key positions whose visas are often sponsored by the employer.

Another of the big four consultants cited above told Moneycontrol that a mid-sized manufacturing firm had hired Indians as chief financial officer and chief marketing officer under the H-1B route. “As of now the immigration law of the US is not clear on what is construed as specialty operations to be eligible for H-1B. With increasing scrutiny of immigration, the firm is concerned about potential revoking of any of the existing visas,” the consultant cited above said.

Since the new rules are being framed, the situation for now is fluid, the first consultant said. “Generally, our advice has been to wait and watch since there is a possibility of judicial intervention. For instance, Trump’s attempt to end birth-based citizenship has been stayed by few courts and the final verdict in the matter is awaited,” the consultant added.

Tariff worries

The companies are also concerned about the impact of tariffs imposed by Trump on exports to the US and whether their existing structures may be construed as Permanent Establishment in countries such as Canada or Mexico.

An entity having a permanent setup is considered a tax resident of the country and many Indian companies have supply chains in Canada or Mexico, triggering fear they could be perceived as permanent establishments by US authorities. This would mean their goods would be subjected to additional tariffs.

The development assumes significance as several Indian companies from sectors such as information technology, financial services, pharma and manufacturing have exposure to the US.

Trump said on February 27 that his proposed 25 percent tariffs, which were put on hold, on Canadian and Mexican goods will take effect on March 4, along with an additional 10 percent duty on Chinese imports, as drugs were still pouring into the US these countries.