09/07/2010 [ tribune.net.ph ]
The Bureau of Internal Revenue (BIR) was urged yesterday to expedite the crafting of its implementing rules and regulations (IRR) on a new law designed to energize the Philippine capital market, spur big-ticket real estate investments and broaden the participation of retail investors and the rest of the public in such projects.
The new law — the Real Estate Investment Trust (REIT) Act of 2009 — was meant to make the country’s real estate market a lot more attractive to foreign investors and fund managers and at the same entice retail investors to take part in large-scale infrastructure projects through stock offerings, according to the private think tank Forensic Law and Policy Strategies Inc. (Forensic Solutions).
Headed by former Justice Secretary Alberto Agra, Forensic Solutions pointed out in its seventh policy paper that the REIT law also aims to protect the investing public by providing a regulatory framework and environment under which real estate investment trusts, through certain incentives, can prosper and attain the government’s goal of stimulating the domestic capital market.
“REITs are generally stock corporations that invest primarily in real estate and qualify for special tax status,” according to Forensic Solutions. “These companies are publicly listed and are viewed as liquid real estate investments because investors are able to liquidate their position in a short time frame, despite the volatility in equity prices,” it noted.
Republic Act 9856 or the REIT Act of 2009, lapsed into law on Dec. 17, 2009 but up to now, only two of three concerned agencies — the Securities and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE) — have issued their counterpart rules and regulations governing REITs.
The third agency, the BIR, has yet to come up with its own set of IRR for REITs, said Agra in the paper, which he co-wrote with Maricel Baltazar, a tax practitioner and former executive of both Pricewaterhouse Coopers Manila and SGV & Co.
Agra and Baltazar noted that the BIR has yet to release the IRR apparently because of several issues governing real estate investment trusts, such as the period of collecting deficiency taxes from delinquent REITs and the imposition of additional tax charges with the revocation of the tax incentives of REITs once they are delisted from the PSE.
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