Posted on 11:02 PM, October 05, 2010 [ BusinessWorld Online ]
LISTED COMPANIES’ plans to set up real estate investment trusts (REITs) could be delayed as the tax bureau is insisting that corporate regulators amend rules implementing Republic Act (RA) 9856.
The law, which took effect last December but has yet to be implemented, establishes the framework for the creation of REITs -- corporations that use a pool of investor funds to purchase and manage real estate assets.
The Securities and Exchange Commission (SEC) last May approved RA 9856’s implementing rules. The Bureau of Internal Revenue (BIR), however, has held off issuing the relevant tax guidelines, insisting that the regulator order REITs to sell more shares to the public.
"What we want is for SEC to amend the rules. We have already asked them but they have yet to reply to us. They have to amend it first," BIR Commissioner Kim S. Jacinto-Henares said.
The Finance department, which has raised concerns over foregone revenues from incentives granted by RA 9856, wants the SEC to raise the amount of REIT shares to be offered to the public to at least 50% from 33.3%.
"This is to make sure that we develop the capital market," Ms. Jacinto-Henares said.
SEC officials were not immediately available for comment.
Finance Secretary Cesar V. Purisima yesterday said: "I asked [SEC chairman] Ms. [Fe B.] Barin to convene the commission and tackle my request because without it (the 50% public float), there will never be capital recycling which is the main goal of REIT."
Among others, the public float should be increased to 67% in three years, Mr. Purisima said.
"I believe the REIT will not push through without the BIR implementing rules...," he added.
Property giants have expressed interest in REITs. Last week, Ayala Land, Inc. said it would set up AyalaLand Commercial REIT, Inc. SM Prime Holdings, Inc. and Robinsons Land Corp. have also said they would tap the sector.
Corazon B. Guidote, SM Investments Corp. investor relations chief, yesterday said the company had no choice but to wait for the BIR to issue the relevant tax rules.
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