All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

FREE: REITs in the Philippines may no longer be a suitable option

The Philippines has finally issued the much-delayed revenue regulations governing the tax incentives granted to real estate investment trusts (REITs).

The Bureau of Internal Revenue released the information at the end of July. The regulations had been delayed until the government agreed to increase the minimum percentage listing on the stock exchange.

The law to introduce REITs was enacted in 2009. Since then, investors were able to take shares in a REIT, established as a company with a minimum share capital of PHP300 million ($7.1 million), which would have, a public float of at least 33% of its outstanding shares.

Since the introduction of REITs, several companies had made plans to float REITs on the Philippines Stock Exchange. But, now that the tax benefits have been released and are less favourable than expected, time will tell if the regulations will damage these floats.

However, it has now been agreed that, to continue to receive tax incentives, a REIT will be required to maintain a 40% minimum public float on the stock exchange for the first two years from its initial listing, rising to at least 67% by the end of the third year.

The regulations confirm that the REITs will be taxed at 30%, subject to a stipulation that, for its first two tax years, each REIT will have to place the tax that would have been payable on the amounts declared and paid as dividends in escrow. However, this is only when the 67% listing threshold is not attained.

Also, all property transferred to the REIT will be subject to a favourable documentary stamp tax (DST) of 0.75%, while transfers of shares in property companies will pay a DST of only 0.375%. However, income tax, capital gains tax, and value added tax, will be payable on the transfer of properties to a REIT.

More from across our site

The Indian Union Budget made some significant changes that will affect taxpayers, as Ranjeet Mahtani, Saurabh Shah, and Meetika Baghel of Dhruva Advisors explain.
But experts cast doubt on HMRC's data and believe COVID-19 would have increased the revenue shortfall.
EY’s plan to separate its auditing and consulting businesses might lessen scrutiny from global regulators, but the brand identity could suffer, say sources.
Multinationals are asking world leaders to put a scale on carbon pricing to tackle climate change at the 48th G7 summit in Germany, from June 26 to 28.
The state secretary told the French press that the country continues to oppose pillar two’s global minimum tax rate following an Ecofin meeting last week.
This week the Biden administration has run into opposition over a proposal for a federal gas tax holiday, while the European Parliament has approved a plan for an EU carbon border mechanism.
Businesses need to improve on data management to ensure tax departments become much more integrated, according to Microsoft’s chief digital officer at a KPMG event.
Businesses must ensure any alternative benchmark rate is included in their TP studies and approved by tax authorities, as Libor for the US ends in exactly a year.
Tax directors warn that a lack of adequate planning for VAT rule changes could leave businesses exposed to regulatory errors and costly fines.
Tax professionals have urged suppliers of goods from Great Britain to Northern Ireland to pause any plans to restructure their supply chains following the NI Protocol Bill.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree