THE Senate and House of Representatives separately ratified the Bicameral Conference Report on the Real Estate Investment Trust (REIT) that will bring the bill a step closer to becoming a law.
The Senate ratified the bicam report last Sept. 29 while the House ratified it the next day.
“We are extremely grateful to our Congress for its support to the REIT bill, which will soon pave the way for investors to become owners of various income-generating properties, as well as to directly benefit from the revenues earned by these REITs.
The vision of our legislators for our country has played a significant role in putting in place this new legislation, which is essential to making our stock market catch up with our fast-growing neighbors,” said Francis Lim, Philippine Stock Exchange (PSE) president and chief executive officer.
After the ratification by Congress of the bicam report, the enrolled REIT bill will be sent to President Arroyo for signature.
The Real Estate Investment Trust Act (Reita) seeks to provide the regulatory and tax framework for REITs, which are companies that own and operate income-producing real estate assets.
Shares of these REITs are to be listed on and traded at the PSE.
REITs are becoming widely introduced in developed and developing countries in Asia. 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 Singa-pore and the US. REITs likewise have their share in building health-care facilities.
To encourage investments in REITs, the Reita provides tax incentives to the REIT.
To enjoy these incentives, the REIT must be listed with a stock exchange and maintain its status as a listed company and annually give out at least 90 percent of its distributable income to shareholders.
Investors will also enjoy tax incentives to help establish a robust and vibrant REIT market.
“For example, overseas Filipino workers (OFWs) shall enjoy exemption from dividend tax for seven years from the effectivity of the tax regulations implementing the Reita.
Non-OFWs shall also enjoy dividend tax exemption if the money they use to buy REIT shares comes from their PERA account.
Foreign investors will be taxed at 10 percent or lower if the relevant tax treaty provides a lower rate,” added Lim.
Lim also said REITs will democratize wealth by broadening ownership of real estate in the Philippines, as well as provide incremental revenues to the national government through income taxes, value-added taxes, and stock transaction taxes to name a few. (PR)
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