Cayman paper chase

SYDNEY, Australia: The Australian, November 21, 2009 – The first European visitor to the Cayman Islands was Sir Francis Drake in 1586 and if the Australian Taxation Office’s recent experience is any guide, the mail service to the world’s favourite Caribbean tax haven hasn’t improved much since then.
Ten days ago, the ATO submitted to the Supreme Court of Victoria that it had sent, via registered mail, a tax assessment to a Cayman resident company owned by Texas Pacific Group. A letter of similar ominous content was apparently also sent to a TPG entity in Luxembourg, another tax-lite destination used by global capitalists.

It is estimated that private equity has about $20bn invested in Australia and that figure will dwindle rapidly should the ATO have its way. Critics of private equity and the sort of clever structuring that involves tax havens such as the Caymans will tell us we probably don’t want or need that sort of fast money anyway. They want to imagine that the $1.58bn TPG repatriated to its clients through the Caymans via The Netherlands will ultimately avoid being taxed. But tax experts insist that is nonsense.

“This capital was not sourced from the Caymans or Luxembourg,” one tax expert said. “It comes from pension funds in North America, from wealthy individuals in China, from pension funds in Europe. And that is, ultimately, where the income generated from the deployment of those funds ends up. Back in taxable jurisdictions. And that is the point of the 2006 reforms. The idea was to avoid double taxation.
“So why the Caymans or Luxembourg? Only because you need a tax-neutral jurisdiction where you can pool the funds from the collective investment vehicle.”


Fund managers re-domicile from Cayman to Malta

LONDON, England: Hedge Funds Review, November 21, 2009 – Managers for a fund specialising in Central Asia and the Trans-Caucasus are planning to move their investment management company to Malta from the Cayman Islands to boost investor confidence. Sturgeon Capital has also picked BNY Mellon as the first global custodian for the Sturgeon Fund and opened a London office as it upgrades its corporate structure.

Being EU-regulated we believe Malta may give investors another level of confidence. The fund, which was launched in 2006 by Clemente Cappello, will remain domiciled in Cayman. Chief financial officer Taco Sieburgh Sjoerdsma said the moves were all designed to strengthen the operation of the company and the fund.