The Philippine Stock Exchange is seeking amendments to the eight-year-old Real Estate Investments Trust law, especially a provision imposing a 12-percent value added tax on the investment product.
REIT gives investors the option to invest directly in the finished products that are already earning money”•such as residential and office units, hotels or shopping malls or even infrastructure ventures like toll roads and power plants”•and not just the property developer. The law aims to attract investors because it requires the distribution of 90 percent of income yearly.
PSE president Ramon Monzon said in a forum the exchange was working with the Finance Department and Congress on how the amend the REIT law to remove the 12-percent VAT on the transfer of assets.
“We are seeking to repeal tax on the REITs. We are working with DOF and Congress to see how we can change this. We think REIT is a very potent vehicle for real estate companies to generate capital to fund their investments,” Monzon said.
“In BIR’s [Bureau of Internal Revenue] mind, they would like to raise money from this activity. But unfortunately [they] have raised zero,” Monzon said.
Monzon said Bangko Sentral ng Pilipinas Governor Nestor Espenilla also expressed support of the PSE position of REIT in order to allow banks to monetize their investments in real estate.
Passed in 2009, REIT law aims to boost liquidity in the stock market and enhance the quality of the domestic financial market.
The PSE earlier estimated that at least $3 billion in new investments from the private sector would be generated due to REIT.