Investigators from the US Government Accountability Office (GAO) will report to the Senate Finance Committee the findings of their investigation of a Cayman Islands building listed as the address of thousands of companies, and their evaluation of US tax compliance implications.
Investigators are expected to detail at a Finance Panel hearing on 24th July how many American businesses have addresses in the Ugland House building in the Cayman Islands and how many American corporations have subsidiaries in the Islands.
Testimony will also review information on the substantial presence of hedge funds in the Cayman Islands along with other financial industries, the amount of assets involved, how easy it is for US citizens to establish a Cayman Islands company, and the challenges faced by the US Internal Revenue Service (IRS) in trying to uncover offshore tax evasion.
Finance Chairman Max Baucus (D-Mont.) and Ranking Member Chuck Grassley (R-Iowa) requested the investigation last year as part of the Committee’s effort to gain a greater perspective on the problem of offshore tax evasion. The Finance panel is holding a series of hearings this year to prepare for comprehensive tax reform efforts in 2009.
"We are concerned that US taxpayers are creating offshore business entities solely to evade their US tax obligations, seeking to confound IRS collection efforts by obscuring the true ownership of American assets or income," the Senators wrote in their letter to Comptroller General David M. Walker in requesting the GAO investigation.
GAO investigators spent a week in the Cayman Islands in March 2008 where they held discussions with Cayman authorities. They also reportedly met with the international law firm Maples & Calder, the tenant of Ugland House, which, according to the Finance Committee, has registered 12,748 companies.
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