Ugland House is a building located in George Town, Cayman Islands. Located at 121 South Church Street, the building is occupied by the law firm Maples and Calderand is the registered office address for 40,000 entities, including many major investment funds, international joint ventures and capital market issuers.
During his first presidential campaign, U.S. President Barack Obama referred to Ugland House as "the biggest tax scam in the world", raising questions over the number of companies with a registered office in the building.
President Obama subsequently nominated Jack Lew to Treasury Secretary in 2013, despite objections that Mr. Lew had invested heavily in funds in Ugland House while he worked as an investment banker at Citigroup during the 2008 financial meltdown, with President Obama stating that he was not concerned about Mr. Lew's past financial transactions.
In 2008, the United States Government Accountability Office (GAO), an independent body of the U.S. Congress, investigated the nature of entities registered in the Cayman Islands and at Ugland House.The investigation involved reviews of documentation as well as interviews with officials from the Internal Revenue Service, Securities and Exchange Commission, the Department of the Treasury, the Department of Justice, the Overseas Private Investment Corporation, and the Export-Import Bank of the United States.
The GAO found that 5% of the entities with a registered office address at Ugland House are wholly owned by U.S. persons. Also, the GAO validated the reasons why the Cayman Islands has become a popular jurisdiction for international finance and business, including the country's reputation "as having a stable and internationally compliant legal and regulatory system." In an interview with the GAO, representatives from the U.S. Internal Revenue Service (IRS) cited "the Cayman Islands’ reputation for regulatory sophistication" and "legal protections for creditors and investors" as factors that might attract legal financial activity.
In addition, the GAO report explained how U.S. government trade promotion agencies use the Cayman Islands and entities registered at Ugland House. The Export-Import Bank told the GAO that it has used the Cayman Islands to support the sale of aircraft manufactured in the United States. Between 2003 and the time of the GAO investigation, the Export-Import Bank had been involved in supporting 42 aircraft financing deals in the Cayman Islands. Also, officials from the Overseas Private Investment Corporation (OPIC), another U.S. government agency, told the GAO that "one-third to half of private-equity funds in which it has invested have been organized in the Cayman Islands." OPIC officials also said that "foreign investors in private-equity funds that they are involved with value the Cayman Islands' reputation for legal neutrality towards investors from different jurisdictions."
The Cayman Islands have worked to promote governance and regulation and have over the years collaborated with governments in the major economies to introduce tax information agreements such as FATCAand co-operation agreements with securities regulators, aimed at promoting a transparent legal regime for global business.
The economy of the Cayman Islands, a British overseas territory located in the western Caribbean Sea, is mainly fueled by the tourism sector and by the financial services sector, together representing 50–60 percent of the country's gross domestic product (GDP). The Cayman Islands Investment Bureau, a government agency, has been established with the mandate of promoting investment and economic development in the territory.
The Overseas Private Investment Corporation (OPIC) was the United States government's development finance institution until it merged with the Development Credit Authority (DCA) of the United States Agency for International Development to form the U.S. International Development Finance Corporation (DFC). OPIC mobilized private capital to help solve critical development challenges and, in doing so, advanced the foreign policy of the United States and national security objectives.
Financial services are the economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, accountancy companies, consumer-finance companies, stock brokerages, investment funds, individual managers and some government-sponsored enterprises. Financial services companies are present in all economically developed geographic locations and tend to cluster in local, national, regional and international financial centers such as London, New York City, and Tokyo.
An offshore fund is generally a collective investment scheme domiciled in an offshore jurisdiction. Like the term "offshore company", the term is more descriptive than definitive, and both the words 'offshore' and 'fund' may be construed differently.
Offshore investment is the keeping of money in a jurisdiction other than one's country of residence. Offshore jurisdictions are a commonly accepted means of reducing the taxes levied in most countries to both large and small-scale investors alike. Poorly regulated offshore domiciles have served historically as havens for tax evasion, money laundering, or to conceal or protect illegally acquired money from law enforcement in the investor's country. However, the modern, well-regulated offshore centres allow legitimate investors to take advantage of higher rates of return or lower rates of tax on that return offered by operating via such domiciles. The advantage to offshore investment is that such operations are both legal and less costly than those offered in the investor's country—or "onshore".
Tax shelters are any method of reducing taxable income resulting in a reduction of the payments to tax collecting entities, including state and federal governments. The methodology can vary depending on local and international tax laws.
Maples Group is a multi-jurisdictional law firm headquartered in the Cayman Islands, with offices in traditional tax havens and corporate tax havens. It is a member of the offshore magic circle. The firm specialises in advising on the laws of the Cayman Islands, Ireland and the British Virgin Islands, across a range of legal services including commercial litigation, intellectual property, sport, and finance, in which the firm has a focus on the structuring of tax efficient legal structures, and executing base erosion and profit shifting (BEPS) transactions for corporations.
Jacob Joseph "Jack" Lew is an American attorney and politician who served as the 76th United States Secretary of the Treasury from 2013 to 2017. A member of the Democratic Party, he also served as the 25th White House Chief of Staff from 2012 to 2013 and Director of the Office of Management and Budget in both the Clinton Administration and Obama Administration.
Offshore magic circle is the set of the largest multi-jurisdictional law firms who specialise in offshore financial centres, especially the laws of the British Overseas Territories of Bermuda, Cayman Islands, and British Virgin Islands, and the Crown dependencies of Jersey and Guernsey.
Private equity funds and hedge funds are private investment vehicles used to pool investment capital, usually for a small group of large institutional or wealthy individual investors. They are subject to favorable regulatory treatment in most jurisdictions from which they are managed, which allows them to engage in financial activities that are off-limits for more regulated companies. Both types of fund also take advantage of generally applicable rules in their jurisdictions to minimize the tax burden on their investors, as well as on the fund managers. As media coverage increases regarding the growing influence of hedge funds and private equity, these tax rules are increasingly under scrutiny by legislative bodies. Private equity and hedge funds choose their structure depending on the individual circumstances of the investors the fund is designed to attract.
Walkers is a Cayman Islands based offshore law firm. Although the firm now has offices in a number of jurisdictions, over half its staff remain based in the Cayman Islands. Walkers set up a branch in 15/F, Alexandra House, Hong Kong. It is a member of the offshore magic circle.
Anthony Travers, OBE was the Chairman of the Board of Cayman Finance from 2009 to 2011. Travers is also the Chairman of the Cayman Islands Stock Exchange and former Senior Partner and Managing Partner of international law firm Maples and Calder. He has over thirty years experience in all aspects of Cayman Islands law, particularly mutual funds, structured finance, insurance and private client, and has throughout advised Government on the development of Cayman Islands legislation.
The Corporation Trust Center, 1209 North Orange Street, is a single-story building located in the Brandywine neighborhood of Wilmington, Delaware, USA, operated by CT Corporation, a subsidiary of Dutch multinational services firm Wolters Kluwer. This is CT Corporation's location in the state of Delaware for providing "registered agent services." In 2012 it was the registered agent address of no fewer than 285,000 separate businesses.
An Offshore Financial Centre or OFC is defined as a country or jurisdiction that provides financial services to nonresidents on a scale that is incommensurate with the size and the financing of its domestic economy. "Offshore" does not refer to the location of the OFC, but to the fact that the largest users of the OFC are nonresident. The IMF lists OFCs as a third class of financial centre, with International Financial Centres (IFCs), and Regional Financial Centres (RFCs); there is overlap.
A Delaware statutory trust (DST) is a legally recognized trust that is set up for the purpose of business, but not necessarily in the U.S. state of Delaware. It may also be referred to as an Unincorporated Business Trust or UBO.
The Foreign Account Tax Compliance Act (FATCA) is a 2010 United States federal law requiring all non-U.S. foreign financial institutions (FFIs) to search their records for customers with indicia of a connection to the U.S., including indications in records of birth or prior residency in the U.S., or the like, and to report the assets and identities of such persons to the U.S. Department of the Treasury. FATCA also requires such persons to report their non-U.S. financial assets annually to the Internal Revenue Service (IRS) on form 8938, which is in addition to the older and further redundant requirement to report them annually to the Financial Crimes Enforcement Network (FinCEN) on form 114. Like U.S. income tax law, FATCA applies to U.S. residents and also to U.S. citizens and green card holders residing in other countries.
Stefan M. Selig is an American investment banker, and past Under Secretary of Commerce for International Trade at the U.S. Department of Commerce from June 2014 to June 2016. In his role, he was responsible for promoting trade and investment to strengthen the competitiveness of U.S. industry and "improve the global business environment". He advocated for the Trans-Pacific Partnership, negotiated the Transatlantic Trade and Investment Partnership and expanded SelectUSA.
Fund governance refers to a system of checks and balances and work performed by the governing body (board) of an investment fund to ensure that the fund is operated in the best interests of the fund and its investors. The objective of fund governance is to uphold the regulatory principles commonly known as the four pillars of investor protection that are typically promulgated through the investment fund regulation applicable in the jurisdiction of the fund. These principles vary by jurisdiction and in the US, the 1940 Act generally ensure that: (i) The investment fund will be managed in accordance with the fund's investment objectives, (ii) The assets of the investment fund will be kept safe, (iii) When investors redeem they will get their pro rata share of the investment fund's assets, (iv) The investment fund will be managed for the benefit of the fund's shareholders and not its service providers.
In 2010, the United States implemented the Foreign Account Tax Compliance Act; the law required financial firms around the world to report accounts held by US citizens to the Internal Revenue Service. The US on the other hand refused the Common Reporting Standard set up by the Organisation for Economic Co-operation and Development, alongside Vanuatu and Bahrain.
Qualifying Investor Alternative Investment Fund or QIAIF is a Central Bank of Ireland regulatory classification established in 2013 for Ireland's five tax-free legal structures for holding assets. The Irish Collective Asset-management Vehicle or ICAV is the most popular of the five Irish QIAIF structures, and was designed in 2014 to rival the Cayman Island SPC; it is the main tax-free structure for foreign investors holding Irish assets.