Five Key Issues of Importance in Preparing EB-5 Source of Funds for Vietnamese Investors

(Author: Ali Brodie, Greenberg Traurig) Ali Brodie is an EB-5 attorney who practices with the Denver office of Greenberg Traurig, LLP. Attorney Brodie concentrates her practice on worldwide business immigration and employer immigration compliance law.

Currency Restrictions

Vietnamese laws regulate the export of Vietnamese currency abroad.  The primary purpose of the “Ordinance on Foreign Exchange Controls” is to secure the Vietnamese Dong as the country’s primary currency.  This makes it difficult for investors residing in Vietnam to transfer funds to the United States to 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 an affidavit from the credit institution to show the trace of funds originating with the investor, through the credit institution, out of Vietnam and into the United States based EB-5 investment.

Taxes on Individuals

USCIS often sends RFEs for lack of five years of tax returns.  In Vietnam, tax on employment income is paid directly by the employer and filed by them with the government.  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 payment of taxes in purchase and/or sale of property, and taxes during duration of ownership.

Gifts of Real Property

Many 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 the evidence of the giftor’s original ownership of the land or home, USCIS cannot confirm that the giftor was legally able to gift the property.  

Currency

The official currency is Vietnam Dong (VND).  However, many investors maintain funds in taels of Saigon Jewelry Company (“SJC”) gold.  The banks in Vietnam did not accept gold deposits until recent years.  Therefore, many investors kept the gold funds at home, until banking regulations changed allowing them to deposit the taels in banks some years later.  In these instances, it is important to provide evidence to account for any gaps in the trace of funds.

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.