Paradise (Tax-free?) Island

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A new IRS crackdown on hedge funds headquartered in the Virgin Islands requires more complete disclosure from people and funds claiming residency in the territory. For instance, you might actually have to live in the Virgin Islands now to claim residency there. The I.R.S. suspects ridiculous fraud (what else is new?) by many funds and individuals, who were using "residency" in the territory to shirk 90% of their taxes. 23 of the 49 hedge funds that were located in the Virgin Islands have left (or “left”) in the last 2 years. An anonymous hedge fund manager was reportedly whistling the following:

Aruba, Jamaica, ooooh I will evade ya
In Bermuda, Bahama, numbers stay pro forma
Key Largo, Montego Bay-be such loose tax code
Ooooh I want to take you down to Kokomo
We’ll relocate fast and then our tax will go
The I.R.S. will never know
Way down in Kokomo

Paradise Lost: Hedge Funds Flee from Island Tax Haven – [DealBook]

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