Hedge Fund Tax Question

The CFA book says hedge funds are tax inefficient because they pay tax on short term trading. I thought funds were largely domiciled offshore in zero tax jurisdictions, and so did not pay tax. Only US investors would be tax (when? on disposal of holding, or annually?)?

just assume they are tax innefficient due to short term trading…don’t overthink this one.

I know this is what the CFA says - but how true is it?