Monday, October 13, 2008 [ manilatimes.net ]
THE Philippine Stock Exchange (PSE) said the Real Estate Investment Trust (REIT) bill will generate no tax leakage for the government despite the perks the measure provides companies and investors alike.
A REIT, the shares of which would be traded like stocks, is a legal vehicle that would allow small and large investors to own income-producing real estate assets and real estate-related assets.
During a briefing, Francis Lim, PSE president and chief executive, told reporters that the proposed law still includes taxes to appease the Finance department.
“We are very much aware that we are at present [in] a deficit and this is the reason why even the proposed REIT system there is some form of tax at the REIT level,” he said.
For example, if the income of a REIT company reaches P100 million, under the proposal, 90 percent of that should be declared as dividends to shareholders and the remaining P10 million will be subject to a tax of 25 percent for 7 years.
Ordinary corporations would be subject to the 30-percent corporate income tax by next year.
The dividends received by the shareholders are also subject to 10 percent tax, unless exempted by law, and therefore, the government is not losing much in terms of revenues, Lim said. Under the Senate version of the bill, domestic firms, resident foreign companies and overseas Filipino investors are exempt from the 10 percent income tax.
Also exempted from taxes are the initial and secondary offerings of REIT securities while transfers of real property to a REIT are exempted from paying documentary stamp tax and creditable withholding tax.- Likha Cuevas-Miel
