Thursday, September 24, 2009 [ sunstar.com.ph ]
THE chairman of the House committee on economic affairs is hoping that the Real Estate Investment Trust (REIT) Act of 2009 gets enacted into law before Congress goes into recess on Oct. 17.
This, after the Senate and the House of Representatives finally approved the REIT bill in a bicameral conference last Tuesday, said Rep. Ramon “Red” Durano VI (Cebu Province, 5th district) in a phone interview yesterday.
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The REIT bill, drafted by Durano, is the Lower House’s version of a similar proposal filed by Sen. Pia Cayetano.
Durano said the development of REITs in the country will help develop the capital market since it will attract investors.
“The REITs are higher yielding and will provide investors with steady income streams since they are only allowed to invest in income-generating assets,” he said.
Aside from this, the approved version also guarantees investors dividends every year, since the law will provide that 90 percent of the income will have to be distributed as dividends on a yearly basis.
“Only the remaining 10 percent will be imposed with the corporate tax, when in a regular company, they are taxed 100 percent of their income,” Durano said.
Corporate tax imposed on REIT entities is also five percent lower than the regular corporate tax rate of 30 percent.
Initially, the first proposal of the REIT bill would have included a tax exemption for companies that register as REITs, but the Department of Finance did not allow this, he said.
To become a REIT, a company is also mandated to register with the Philippine Stock Exchange as a publicly-traded company within two years from incorporation.
“This way,” Durano said, “ordinary citizens are able to partake of real estate ventures.”
Certain measures are also being considered under the bill to safeguard the interests of local investors. Durano said local investors are given priority over foreign ones and REITs must also be incorporated in the Philippines to avail themselves of the incentives.
Laws governing corporations in the country registered under the Securities and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE) will also cover
Since it also involves money, Durano said the Bangko Sentral ng Pilipinas (BSP) will also be involved in formulating the implementing rules and regulations once the REIT is signed into law by the President.
Durano also said that once the REIT is already developed in the country, investors can also expand to infrastructure development, where roads, expressways and bridges can be managed by private companies.
Published in the Sun.Star Cebu newspaper on September 25, 2009.