Long known for having neither, the Cayman Islands are set to introduce both taxes and regulations for the thousands of hedge funds registered there.
Caymanian Premier McKeeva Bush last week unveiled the broad strokes of the British overseas territory's budget for the fiscal year beginning July 1. It includes an annual fee on some hedge funds domiciled in the country.
Hedge funds covered by the fee—Bush was short on details, promising to deliver the full budget to the Caymans Legislative Assembly shortly—would pay CI$1,500 (US$1,800). The C$4.5 million raised by the measure—the only revenue-raising measure in Bush's budget—would be used to pay rebates to islanders to offset their electric bills.
"This summer's just beginning and from what I can see in electrical bills, it's going to be a long, hot summer," Bush explained.
The new levy coincides with the Cayman Islands Monetary Authority's first hedge fund regulations. Bush has said that neither measure will adversely affect the Caymans' position as a financial center.