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Reit tax incentives drafted



by Jenniffer B. Austria
[ manilastandardtoday.com ] June 22, 2010

The Bureau of Internal Revenue has approved the draft rules of the Real Estate Investment Trust law outlining the tax incentives and privileges to be enjoyed by companies that will list revenue-generating assets to the Philippine Stock Exchange.
The BIR said it would consider comments on the draft rules from concerned parties before issuing the final version of the guidelines.
The draft rules said a Reit company will be registered with the Large Taxpayers Regular Audit Division of the BIR and be required to submit copies of documents and its plan.
A Reit company will be entitled to tax incentives and privileges, including a reduced creditable withholding tax rate of 1 percent for income payments received and lower documentary stamp tax from the sale or transfer of real estate property.
A Reit company must remain listed to qualify for the tax incentives. It should also be listed with the stock exchange within two years from the initial availment of the DST incentive and earmark at least 90 percent of its distributable income as required under the Reit law and its regulations.
A Reit company availing of the tax incentives will not be entitled to avail of other tax incentives provided under special laws.
The tax incentives aim to encourage growth of the Reit sector in the Philippines.
The Securities and Exchange Commission last month approved its own version of implementing rules, including the required capitalization of companies that will list with the stock exchange. The SEC rules require Reit company to have a capital of at least P300 million.
Reit companies are those that own and operate income-generating real estate assets. The Reit law aims to provide the public an opportunity to own income-producing property assets at an affordable rate of investments.
The most common Reits are found in the retail, commercial and industrial sectors. Infrastructure Reits have played a major role in funding government infrastructure projects in countries such as Singapore and the US. Reits also have their share in building healthcare facilities.
Several real estate companies in the Philippines earlier expressed interest in participating in Reit. SM Prime Holdings Inc., the country’s largest shopping mall operator and developer, plans to raise $600 million from Reit while Ayala Land Inc. is looking to generate $300 to $400 million.
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