Taxing Questions For Private Equity

The world’s taxing authorities are growing increasingly concerned about private equity, and are working together to do something about it.

The world’s taxing authorities are growing increasingly concerned about private equity, and are working together to do something about it. Tax officials – especially in the U.S. and U.K. – are concerned that p.e. firms are discouraging tax transparency and encouraging tax avoidance, The Times of London reports. A meeting in Seoul, South Korea, convened by the Organization for Economic Cooperation and Development, tasked the U.K.’s Revenue & Customs to probe the role of lawyers, accountants and financial institutions “in relation to non-compliance and the promotion of unacceptable tax minimization arrangements.” A recent Citigroup report said that “private equity investors are very interested in how tax can be used to generate value in addition to more typical routes built around capital structure changes and managerial improvements.” Among these efforts, some p.e. firms encourage portfolio companies to change their tax residency to lower-tax jurisdictions.