Venture capital tax change take effect following meeting
Multnomah County Board of Commissioners approved new administrative rule that addresses the tax treatment of venture capital funds.
After listening carefully to complaints from local venture capital firms during hearings on reform to the Business License Fee in April of 2007, the Revenue Bureau, City Commissioner Sam Adams’ Office and County Commissioner Jeff Cogen’s Office put together a workgroup that included representatives from the venture capital industry, tax professionals and city and county representatives. This workgroup was tasked to review the tax treatment of venture capital funds. If venture capital funds were found to be disadvantaged in Portland and Multnomah County, the group was to jointly design a solution that would overcome this disadvantage without creating unintended consequences for the Revenue Bureau or other businesses.
The workgroup determined that it was appropriate to treat venture capital, mutual funds and all diversified investment funds alike under the local Business License Fee and Business Income Tax. It was not the goal to create a more favorable tax treatment for any particular type of fund or business. The final administrative rule reflects consensus on the best way to ensure that discussions of tax treatment have been answered for all parties.
In considering the group’s efforts, Commissioner Adams said, “The workgroup found a sensible, equitable solution. I see this as a great example of problem solving through public/private dialogue and collaboration. I hope the process and the outcome send a welcoming message to investors and local businesses they might support.”
Commissioner Cogen said, "Portland and Multnomah County have been discouraging venture capital firms from locating here for too long. A flaw in our local business tax structure caused local firms to headquarter outside of our City and County. This reform levels the playing field and welcomes them back."
Posted on November 29, 2007
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