Wednesday, 28 July 2010 00:00 [ manilatimes.net ]
BY KATRINA MENNEN A. VALDEZ REPORTER
The Department of Finance (DOF) said it will push for the deferral in the implementation of a new tax-eroding law that aims to go around Philippine restrictions on foreign ownership of real estate assets. On the sidelines of the 60th Anniversary of the Management Association of the Philippines, Finance
Secretary Cesar Purisima told reporters that the government would draft the implementing rules and regulations (IRR) of the Real Estate Investment Trust (REIT) Act in such a way that it would minimize the erosion in tax revenues.
The REIT Act, or Republic Act 9856, grants tax and other incentives to investments related to the financing and the management of big real estate projects in the country.
“We are currently in talks with the authors of the REIT law. We want to get involved in the drafting of the IRR so as to minimize its adverse impact on the government’s revenue side,” Purisima said.
The DOF chief said he would seek a deferral of the IRR until such time that safeguard measures against its tax eroding impact are in place.
The department estimates revenue losses of P2.7 billion a year from the implementation of the REIT Act. For the first year alone, the government expects to lose P1 billion.
The new law allows the establishment of a corporation in which investors can own shares of stock in income-generating real estate assets. These shares would be listed in the Philippine Stock Exchange (PSE).
The Philippine Constitution bars foreign ownership of land.
Listed Philippine real estate developers have been running afoul of foreign ownership rules amid the huge overseas interest in the domestic property sector.
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