Is tax the forgotten risk as far as fund director fiduciary duty is concerned?

The global tax landscape for your typical alternative investment fund
(‘AIF’) is one of increasing complexity and scrutiny. Global tax provisions is becoming ever more complex and cumbersome with tax transparency and exchange of information becoming the norm.
Typically, an AIF and its board of directors (‘the board’) have no internal resources to oversee and manage tax risk, instead the identifying, dealing with, monitoring and mitigation of tax risk is spread across a plethora of outsource providers ranging from the TA (client on-boarding, AML, KYC and the links to FACTA and CRS), to the custodian and administrator (in relation to accounting for transactions correctly and dealing with any withholding tax implications), the prime broker (for transaction related taxes like FTT and stamp duty) and the asset manager (where tax risks extend from residency, permanent establishment risk, to the transaction process, the BEPS agenda, Country by Country reporting for the AIF and oversight of the tax reporting process on behalf of the AIF and investors – US K1, UK reporting funds and many more potential tax risks).

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