Overview
Arvin Abraham, attorney at law firm McDermott Will & Emery, said:
“Proposals to increase taxation on carried interest are a classic case of short-term thinking that risks destroying a valuable part of the UK economy. The UK has the largest private equity and venture capital eco-system in Europe and second largest globally (after the United States), which has invested over £43 billion into UK businesses from 2015-2019 and employs over 972,000 people. However, in a post-Brexit world the UK’s pre-eminence in this sector is under increasing threat.
“The UK already has a higher effective tax rate on carried interest than many competing states in Europe and internationally. Sensing opportunity, France recently further liberalized its regime for taxing carried interest and internationally jurisdictions such as Hong Kong are following suit. While the rest of the world seeks to court an industry that provides immense economic benefits, attempts to reverse course in the UK risk a pyrrhic victory with significant reductions in tax revenues due to lost investment and jobs if the industry were to shift to friendlier states. Characterizations of ‘fiscal cakeism’ are a myopic take on an industry that is an incredible driver of economic growth and dynamism for the UK and one that we cannot afford to lose.”