Every hedge fund is registered in some obscure offshore location. Don't confuse that with where it's managed from.

The reason is tax related. The investors don't want a tax bill dependent on some complicated local regime, and you want investors from different countries. That doesn't mean there's never any tax paid, it the company that "advises" or manages the fund will still be based in a well known financial centre like NYC or London, and will pay all the same corporate and employment related taxes that any other firm pays. The 2/20 fee goes to this management firm. And when the investors bring their money back into their jurisdiction, they pay according to whatever the capital gains regime that's relevant.