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All change for alternative investments The continuing turmoil in global financial markets is driving significant change across the industry. The alternative investment sector – private equity, real estate and hedge funds – is no exception, undergoing some fundamental structural changes.
More FATCA: How it catches private equity and real estateThe previous issue of frontiers in tax (November 2011) reviewed the latest developments in relation to the US Foreign Account Tax Compliance Act (FATCA). It was surprising that certain members of the financial services sector appeared to misunderstand the implications of the new legislation, taking the view: ‘It’s not relevant to us; we don’t have any investors in the US’. However, FATCA is going to catch any fund manager or investment manager who invests in the US on behalf of their clients, wherever they are domiciled. In addition, FATCA has specific implications for private equity and real estate funds, which are considered here.
A multidimensional challenge: Domicile, operations and tax in alternative investmentIn developing their response to the global financial crisis, policymakers and regulators have been driven by a number of different imperatives. They have also often been as concerned with the perception of action as with the underlying reality. Thus, that alternative investment and hedge fund managers face a range of new regulatory measures despite, arguably, bearing little responsibility for the crisis in the first place.
Aligning tax regimes to support infrastructure investmentGovernments in both the developed and developing world are keen to promote investment in national infrastructure. In the developing world, countries are industrializing rapidly and populations are growing significantly. The scale of change can create social tensions between rural and urban inhabitants and can magnify poverty and exclusion in both town and countryside. Infrastructure investment is vital: to support continued economic growth; to ease pressure on resources; and, to help eliminate poverty and disease.