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Komfie Manalo, Opalesque Asia: The U.S. Treasury Department on Thursday introduced a new rule aimed at limiting hedge funds’ ability to reduce their tax bills by investing in insurance companies in offshore tax havens.
As a general rule, the U.S. tax laws does not allow hedge funds to use offshore corporations to delay payment of their tax bills, reported The Hill.
For the past several months, U.S. Sen. Ron Wyden has been criticizing the apparent loophole in the government’s tax rules, especially income coming from offshore insurance companies that are taxed at a much lower rate.
Wyden said that hedge funds have been exploiting this loophole and are funneling investments in offshore companies.
Under the new rule, the Treasury seeks to clarify if an insurance company is legitimate or not. It is seeking public comment over the next 90 days, it said.
According to Joe Taussig, a consultant who helps hedge funds form offshore re-insurers, hedge fund managers like Moore, Maverick, Greenlight, Cerberus, Citadel, HBK, D.E. Shaw, Apollo, AQR, Third Point, SAC, Paulson, and Soros have all acquired or started reinsurance companies (Soros has formed at least four).
Taussig said in an Opalesque.TV interview that the hedge funds' primary reason is that the...................... To view our full article Click here
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