Synopsis Fund managers tend to earn millions in carry fees when they invest the money of PE or VC funds and also when they exit such investments. A quick resolution of this issue is needed, tax experts say, since it could also lead to transfer pricing complications. Getty Images Top private equity (PE) and venture capital (VC) funds are a worried lot. PE and VC funds – looking to resolve the issue of indirect tax on the carry fee earned by managers -- are trying to create a step-down entity that will act as a buffer to absorb the charge before passing it on to the main firm.