KKR’s Entry Into Canadian Oil Patch Crimped by Tax Clampdown

Canada is clamping down on off-shore tax shelters used by private-equity funds, in a move that may curb investment in the oil and gas industry by KKR & Co. and Blackstone Group LP.

The government has given private-equity firms and other interested parties until April 11 to respond to proposals tucked into the February budget that would curtail energy and mining deals by denying tax benefits to foreign investors setting up holding companies in countries such as the Netherlands, Luxembourg and the U.K. to capitalize on friendly tax treaties. As the 60-day deadline for comments approaches, opposition by private-equity firms has increased, according to lobbyists working on their behalf.