In an effort to shed some more light on how sovereign wealthfunds (SWFs) are taxed and regulated, Senate Finance Committee leaders lastweek asked the Joint Committee on Taxation to evaluate current tax rules thatapply to SWFs, according to Financial Week.
The lawmakers also asked the nonpartisan committee toclosely look at any possible trends in SWF investments, as well as thetechniques SWFs use to invest in
“With increasing U.S. investments being made by (sovereignwealth) funds, we decided we ought to make sure we have a clear understandingof the U.S. rules that apply to these investments,” committee chairman MaxBaucus (D-Mont.) and Republican Charles Grassley (Iowa), said in a statement. “This research requestwill help us understand the role of tax policy in the sovereign wealth fundpuzzle.”
SWFs’ passive investment is currently resistant to taxationunder section 892 of the Internal Revenue Code, and Victor Fleischer, a financeprofessor at the