Implication of FATCA for hedge funds in South Africa

 

Most hedge fund managers have responded that FATCA does not apply to them because we do not have any United States (US) investors. This can be likened to stating that a particular financial institution does not have to comply with the anti-money laundering legislation because it does not on-board any money launderers. FATCA is not only concerned with whether a hedge fund has US Investors but whether, by virtue of the hedge funds business activity and its legal structure, it is a vehicle that potentially may be used by US Persons to evade their tax obligations in the US. Further, FATCA is designed to ensure that South African hedge funds are in a position to report not only US persons but also other Non-Participating Financial Institutions and passive Non-Financial Foreign Entities.

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