Infrastructure investing: Global trends and tax considerations, part II (PricewaterhouseCoopers)

November 2010

KEYWORDS: infrastructure, Global, public-private partnership, United States, Australia, Mexico, Spain, FONATUR, National Trust Fund for Tourism Development, President Obama, Committee on Foreign Investment in the United States, capital gains, capital gains tax, trusts, flat tax, value added tax, FIRPTA, REITs, Foreign Investment in Real Property Tax Act, Real Estate Revitalization Act of 2010, Internal Revenue Service, IRS, alternative minimum tax

Authors:

Oscar Teunissen, Joni Geuther

Organizations:
  • PricewaterhouseCoopers

Summary:

Infrastructure investments continue to rank as a high priority for government agencies, sophisticated financial services, and private equity investors.

From a governmental perspective, infrastructure spending is an essential component of fiscal stimulus. It combats the effects of the global economic downturn and keeps countries on track for economic growth. From the developers’ perspective, infrastructure investing provides long-term, inflation-linked cash flow. A prudent investor needs to be familiar with the relevant market trends and business objectives, as well as the tax considerations involved, when evaluating infrastructure investments.

The increased focus on infrastructure investments has led to certain best practices that are well recognized by all sophisticated market participants, including government agencies, investors, and lenders. One such best practice is the public-private partnership (PPP) arrangement, which we discussed in our previous article “Infrastructure investing: global trends and tax considerations.”

Financing models for infrastructure projects also keep developing. A recent example is the issuance of bonds by Chicago Parking Meters LLC, the concessionaire that operates Chicago’s on-street metered parking system. These bonds are geared to provide the concessionaire’s shareholders with partial repayment of their equity.

This article focuses on recent developments concerning the infrastructure space in the United States and other countries such as Australia, Mexico, and Spain. It is arranged as follows: (I) Current trends and recent developments in the infrastructure arena, (II) Country-specific tax considerations, and (III) Conclusion.

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