Caymans To Introduce Hedge Fund Levy

by Amanda Banks, Tax-News.com, London

14 June 2011

The Cayman Islands is to regulate and tax certain types of hedge funds for the first time, under a new measure brought in by the Budget.

Delivered on June 10 by Premier and Finance Minister McKeeva Bush, the Budget introduced only one new revenue measure.

It provides for the regulation of "master funds" in particular, by the Cayman Islands Monetary Authority. This, as Bush noted, is the practice in other jurisdictions.

Such funds are not currently regulated in the Cayman Islands, but, under the new rules, will be obliged to pay a KYD1,500 (USD1,842) fee per year.

Bush labelled the levy "very modest", and said the government had heard from local industry leaders who concurred that the charge could be introduced without any adverse effect.

Bush did not elaborate on when the changes will come into effect, but expects to use KYD4.5m of the anticipated revenue to issue a rebate to Caribbean Utilities Company in respect of the company's payment of duty on the importation of diesel to produce electricity.

Recommended