Private equity strikes back on tax claims

A likely tightening of the tax environment for private equity players in the United Kingdom and the United States has seen private equity operators in the Australian market move quickly to defend their position and argue that private equity in Australia “is treated no differently to other forms of ownership”. Incoming British Prime Minister Gordon Brown has pledged a new approach on private equity tax treatment based on “justice and equity”, whilst two bills are currently before Congress in the United States, to close a loophole that allows private equity firms to be taxed at a lower (15 per cent) capital gains rate than if the profits were treated as income.