Investors and asset managers are rethinking traditional approaches to cross-border investment, especially in light of the evolving tax environment in which governments are considering how to address budgetary shortfalls resulting from the COVID-19 situation. Traditionally, investors and asset managers often establish entities that offer legal attributes to facilitate cross-border investing arrangements of pooled capital, while also maintaining tax neutrality. Sometimes, these structures will also have certain tax attributes (e.g., transparent or opaque) which can mitigate unintended adverse tax issues.
While some countries’ corporate law, tax and regulatory environments have proven popular for such structures, this is now changing as recent tax treaty, disclosure and substance developments are causing investors and asset managers to reconsider historically popular jurisdictions in favor of new jurisdictions that may offer similar advantages at the same cost. In recent conversations, asset managers and investors have shared that they are especially focused on structures that are resilient and sustainable despite ever shifting fiscal sands.
In this blog series, which will run over the next few months, we will consider some of the new jurisdictions or regimes that are increasingly considered by asset managers in today’s environment, and highlight the reasons why they are garnering attention. Before we do that, however, it is worth reflecting on why change is happening in the first place.