Authors: Dr Sally-Ann Joseph
Investment funds are entrenched in the global financial market. How they are regulated and how they are taxed is well established. This is not the case with sovereign wealth funds which, being beneficially owned by a government, makes them strategically unique investment vehicles. Increasing in both number and value, they are economically significant, especially in developing nations. Bounded by the international doctrine of sovereign immunity, each globally-operated fund is nevertheless taxed under country-specific tax systems. As not all countries recognise the doctrine of sovereign immunity when taxing sovereign wealth funds, reliance on bilaterally negotiated tax treaties may be the only available option. Yet, unless specifically negotiated, these treaties do not embody the application of sovereign immunity.
Keywords: sovereign wealth funds; taxation; sovereign immunity; tax treaties