Treasury Department Proposes New Regulations That Liberalize US Tax Rules Affecting Investments by Foreign Governments
On November 2, 2011, the Treasury Department proposed new regulations under Section 892 of the Internal Revenue Code that liberalize US tax rules affecting investments by foreign governments or their controlled entities. The proposal includes rules to eliminate some adverse effects of holding limited partner interests, and, thus, could make investments by sovereign wealth funds and other foreign governmental entities in private investment funds more attractive. The proposal also remedies various problems under the existing regulations that have previously impeded investment by foreign governments.