Connecting Fund Managers with Impact Investors’ Tax Principles

Source(s): FMO and BII

The purpose of this article is to initiate communication between multilateral and bilateral development finance institutions (‘’DFIs”) and private equity fund managers (“FMs”) that seek to attract DFI funding for investments in countries within the mandate of DFIs. This is with the intention of equipping FMs with an upfront understanding of responsible tax standards typically imposed by DFIs when investing in FMs.

The expectation is that such understanding over time is mutually beneficial to the FM and the DFIs as it should have the consequence of markedly reducing the time that is currently spent on due diligence and side letter negotiations to find an agreement on the responsible tax principles to be adopted by the FM, for both fund investments and fund manager tax practices.

The circulation of this article to the GPCA community is intended to invite interested FMs to further discussion outside the pressure of funding deadlines and an upcoming workshop on Monday, March 27, around the GPC Conference in New York to share views, experiences and needs of both FMs and DFIs.

This article will describe the tax principles commonly seen with DFIs and the need for transparency by FMs as well as a core set of principles that can be used as a framework.