Pre-Immigration Statutory Asset Protection for EB-5 Visa
This ORSO/IRC 402(b) entity is the only statutory asset protection and tax deferred income solution possible for residents of the People’s Republic of China because it is integrated pension laws that are recognized by the Peoples Republic of China, the Internal Revenue Service, the Department of the Treasury, Double Tax Agreement (”DTA”), Tax Information Exchange Agreement (”TIEA”) and the Foreign Account Tax Compliance Act (”FATCA”).
There are three key issues to investing from PRC into USA with an EB-5 Visa
Second issue: assuming that AML (anti-money laundering) and Disclosure is done then there must be a pension fund on the receiving end for PRC people. There must be this government regulated, registered and recognized Hong Kong pension fund law or it will not work. It is not a legal trick.
Third issue: what has the U.S. or the U.S. Dollar have to do with it? You need a strategy that lays out the U.S. laws that provide the asset protection, exemptions from reporting and tax deferred benefits to those entering the U.S. Investment Immigration Program (EB-5 visa). We can discuss all of those benefits; there are many. But first, the functionally for moving PRC client’s money outbound from the PRC there are three different aspects:
- is it a corporation, a business moving money-probably not
- is it an individual wishing to invest internationally-probably not
- is it a professional investor wishing to move money-probably
On the basis of a professional investor moving money is simple these days because there is a through train from Shanghai to Hong Kong, for investment purposes. There is no magic in this; it is a very straight forward and recognized legal process.
The individual or business opens an investment account with this Shanghai broker to buy investments for his account with a Hong Kong pension fund. For outbound investment from the PRC the basic steps are:
- the AML disclosure is done.
- the Shanghai Broker must be a China Regulatory Securities Commission regulated broker to accept RMB or any other currency
- the investments made must be for the account of the Hong Kong pension fund. When investments are held in Hong Kong it is for the account of the pension fund, meaning that the individual investing belongs as a member of the pension fund in the first place.
In summary, after the client’s AML passes the test they open an account with this Shanghai broker and give instruction to execute a trade. The investment, which is their own preplanned choice, is booked in Hong Kong where an account has been open in the name of this pension fund member. The member instructs the Hong Kong trustee to execute the trade as a formal matter. That is the best way to do it because it checks all the boxes.
Under the new regulatory regime brought to you by the Foreign Account Tax Compliance Act (FATCA), all but one type of existing foreign financial framework used to invest capital outside the U.S. is noncompliant or non-functional with U.S. reporting. Allow us to introduce the one true solution.