Study On Income Tax Law Of Limited Partnership Private Equity Fund

As an effective and convenient way of direct financing, Private Equity(hereinafter “PE”) enjoys a hot pursuit by the market. With the amendment in2006ofthe Partnership Enterprise Law, limited partnership system in China has been legallyestablished. Limited partnership PE funds have sprung up since then in the land ofChina. Local governments have introduced various policies in finance, tax andregistration process to support the development of local limited partnership PE, andpromote the prosperity of the private market. Contrary to local governments’enthusiasm, there is no specific law for the limited partnership PE, which leading tothe emergence of a series of policies, laws and regulations which are inconsistent withor unfavorable for limited partnership PE, especially in terms of the income taxsystem. Is Chinese current income tax system in limited partnership PE fund is perfect?Is the tax burden scientific and reasonable? Will advanced experience of foreignlimited partnership improve our income tax system in private equity funds? Thisseries of issues is to be studied in this article.Discussions on limited partnership private equity funds domestic and abroad aremostly focus on economics perspectives. Rarely do these discussions focus on tax law,let alone income tax law. How to balance the income tax and the development oflimited partnership private equity funds? We need to analyze and evaluate Chineseincome tax law system for limited partnership private equity funds.This article firstly attempts to sort out Chinese current income tax law system forlimited partnership private equity funds. Next, this article will analyze a true case of Nanhai Growth PE to discover the tax influence on limited partnerships. What’s more,this article will introduce the American experience on limited partnership privateequity funds, and put forward a series of general principles and specific regulations toperfect our income tax law system for limited partnership private equity funds.