Report Chides Offshore Hedge Funds On Dividend Tax

Law360, New York (September 12, 2008, 12:00 AM EDT) -- Offshore dividend tax abuse could be costing American taxpayers hundreds of millions of dollars each year, according to a bipartisan U.S. Senate report released Thursday.

The report, issued by the U.S. Senate Permanent Subcommittee on Investigations, claimed that offshore hedge funds and U.S.-based financial institutions conspired to skirt the 30 percent taxation rate on U.S. stock dividends by engaging in complicated stock swap and loan transactions immediately before dividend payments were made.

Often the offshore hedge funds are offshore in name only, the report found. Most...
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