Research On Income Character Of Limited Partnership Private Euity

Great reform on organization form of private equity fund has taken place since limited partnership was stipulated as a legal form in 2007 revised “Partnership Enterprise Law of the People's Republic of China”.Apart from the ideal combination of capital and human resource,and the limited liability of limited partner,the none-tax status in entity level is also a main attracting factor for investors.However,tax rules on limited partnership private equity,which is still at an initial stage,cannot meet the requirements of the legal practice.In respect of the present academic studies related to limited partnership private equity taxation rules,most domestic scholars merely point out the problems in the current provisions while not carry out deep research on particular issue.After careful study of the current regulations,this paper finds out that there is a huge difference between local and central regulations on taxable items of partner's taxable income,which results in different tax burden.Serious contradictory in central and local regulations is not only a breach of legalism of taxation,but also a contradictory to the principle of taxing on capacity for it brings out different tax results.With all the local regulations violating the central provisions,it is important to figure out what exactly the taxable items should be.This paper holds that,to determine the taxable items,the priority is to recognize the character of partner's income.This paper will first examine relevant theories on this issue,including how income characters flow through entity to individual partners in different partnership tax modes and different roles of limited partner and general partner.Then the paper will focus on principles of taxing on capacity as well as taxing on economic substance and analyze the characters of specific revenues of individual partners in limited liability private equity,which in order to promote the uniformity of central and local regulations.