Philippines REIT Tax Regulations Approved
Tuesday, July 12, 2011
It is expected that the much-delayed publication by the Bureau of Internal
Revenue (BIR) of the proposed tax incentives for real estate investment trusts
(REITs) in the Philippines will be published shortly.
The Finance Secretary, Cesar V. Purisima, has said that he recently signed
off on the revenue regulations for REITS, which had been delayed by his stipulation
that the government would not be able to consider approving the proposed regulations unless it was agreed to increase the minimum percentage
listing on the stock exchange.
When the law to introduce REITs was enacted in 2009, investors were able to take shares
in a REIT, established as a company with a minimum share capital of PHP300m
(USD7m), which would have, at all times after listing, a public float of at
least 33% of its outstanding shares. It now appears, however, to have been agreed
with the BIR that a REIT will be required to maintain a 40% minimum public float
on the stock exchange, rising to at least
67% within three years from the REIT’s initial listing.
In addition, while the new vehicles have been allocated certain tax benefits,
including the basing of the 30% company income tax rate on their net taxable
income, but only after the distribution of a minimum 90% dividend to their shareholders,
and an exemption from the initial public offering tax when listing their shares,
it is reported that REITs will not be exempt from value added tax (VAT) on properties
transferred into a REIT, as had been hoped.