Sweden’s finance minister has halted plans to raise the tax rate on carried interest after uproar from both private equity firms and their opponents.
Anders Borg has canned the proposal to raise the levy amid concerns it was too lenient, would encourage clever accounting and complicate the tax system.
Swedish lawmaker and chairman of the Committee of Industry and Trade, Mats Odell, told news agency TT the plans had been put “on ice”.
He said the tax hike would hurt the inflow of private equity investments in Sweden, adding the uncertainty surrounding the situation was hurting the private equity sector and the rule of law.
The country recently targeted private equity firms by closing a $1bn tax loophole following outrage at their profits in the healthcare sector.
Finance minister Anders Borg announced that firms would no longer be able to avoid taxes by borrowing money from related firms in lower or zero-tax areas, which he described as “aggressive” and “doubtful”.
The move will increase the country’s tax revenues by about $936m, although the ministry said this could be compensated by a suitable reduction in corporation tax.
Private equity firms have come under heavy media scrutiny in Sweden for making profits out of the healthcare sector while using clever accounting to reduce their overall tax bills.
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