AFTER much bluster, fiscal authorities have bowed to market pressure to lower the public float requirement that qualifies a real estate investment trust (REIT) to tax perks.
On the sidelines of the second general membership meeting of the Financial Executives Institute of the Philippines, Department of Finance (DOF) Secretary Cesar Purisima told reporters that the government is amenable to granting tax perks to REIT companies even if their public float falls below the 51 percent requirement.
“There is a series of meetings going on with the Securities and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE) on the development of the capital markets and as to how we would go on the REIT matter. But essentially, we are now willing to implement the REIT, without companies [having] to comply immediately with the 51-percent public floatation requirement,” Purisima said.
“Then from there, we would gradually go up toward 51 percent. But 33 percent as the one that they have been insisting is for us too low,” he said.
Even when the 51 percent hurdle is attained, the DOF wants the companies to retain their management, Purisima said.
“Of course, we want each real estate firm to maintain the management of their own corporations. Only that the public would become the majority owner representing 51 percent [of the] shares,” he added.
Last year, the implementing rules and regulations (IRR) of the REIT Act was put on hold after the DOF insisted that companies seeking tax and other perks under this law must first give up at least 50 percent of their ownership stakes to the public.
Under the draft IRR, the DOF wants the SEC to increase the amount of REIT shares to be offered to the public from 33 percent to 50 percent plus one share. Fiscal authorities also want this raised to 67 percent in the next three years.
The Aquino administration stressed that such a condition was aimed at expanding the public’s participation in the real estate industry.
The DOF estimates revenue losses of P3.7 billion a year from the implementation of the REIT Act. For the first year alone, the government expects to lose P1 billion.
The said law allows the establishment of a corporation in which investors can own shares of stock in income-generating real estate assets. These shares would be listed at the PSE. –KATRINA MENNEN A. VALDEZ REPORTER, Manila Times
Short URL: http://www.manilatimes.net/?p=2938
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