Documenting source
of funds
This leads into the last
obstacle: how to tackle the
“white paper” vs. “black
money” issue. In 2012,
the Indian Ministry of
Finance defined “black
money” as “assets or
resources that have
neither been reported
to the public authorities at the time of their
generation nor disclosed
at any point of time during their
possession.” In order to escape Indian
tax jurisdiction, many Indians underreport gains made in asset
transactions or income earnings. While many EB-5 practitioners
familiar with the Chinese EB-5 market may not be surprised to
learn of this issue, it is important to account for some amnesty
provisions, government investigatory bodies, and parliamentary
bills that have been created to tackle this issue in India. Although
the black money economy is an enormous challenge in many
countries, Friedrich Georg Schneider, a German economist,
suggested in 2006 that the size of India’s black money economy
was below average in relation to its GDP (contrasted with the
average Asian, African, or Latin American economy). As the
trajectory becomes more contentious, EB-5 developers should
be cautious when reviewing an investor’s source and path of
investment funds. However, I feel this should not be a deterrent
to exploiting the Indian market.
Is the Indian EB-5 market worth the effort?
The ever-looming Chinese quota retrogression is forecasted
to take effect in the coming fiscal year. As a result, there is an
understandable level of anxiety within the EB-5 community.
There are also doubts regarding the sustainability of the real
estate boom in China, which accounts for a majority of Chinese
EB-5 investment funds. While it is clear that the Indian share
of the EB-5 market will not soon overtake the Chinese investor
market share (currently 80 percent of the annual EB-5 usage),
I think it does have the capacity to jump 20-30 percent in the
next few years. Given how underdeveloped the Indian EB-5
market is, EB-5 developers would be wise to explore this untapped market.
★
Rohit Kapuria is an associate in the Philadelphia office of
Klasko, Rulon, Stock & Seltzer, LLP and a member of the
firm’s EB-5 practice. He currently represents developers and
foreign investors under the EB-5 program. Prior to entering
the legal field, Rohit worked as an economist for a non-profit
organization. He can be reached at rkapuria@klaskolaw.com.
Located in Burr Ridge, IL, just outside of Chicago, IL,
we are a Regional Center approved by the United
States Citizenship and Immigration Services (USCIS).
GCGRC invites you to partner with us and join us in
developing EB-5 investment opportunities. We have
the ability to identify, underwrite, develop, and market
numerous development projects in multiple industries.
Live the American Dream:
· Invest in American businesses
· Start your own business
· Provide opportunities for your family
· Retire in the United States
· Enroll your children in American Universities
Our partners include a professional network of
developers, contractors, government agencies and
attorneys, all equipped to provide our investors with
the optimal business opportunities.
+1 (312) 273 4917 · info@gcgrc.com · www.gcgrc.com
w w w. E B 5 I n v e s to r s . c o m
A partner of Hawthorne
Development
Corporation
Continued
on page
18
15