REIT regulations
THE Bureau of Internal Revenue (BIR) issued Revenue Regulations 13-2011 implementing the Tax Provisions of Republic Act No. 9856 also known as the “Real Estate Investment Trust Act of 2009”.
A Real Estate Investment Trust (REIT) is a stock corporation established in accordance with the Corporation Code of the Philippines principally for the purpose of owning income-generating real estate assets.
A corporation becomes a REIT and qualified to avail of the incentives and privileges of the REIT law when its REIT Plan is rendered effective by the Securities and Exchange Commission (SEC) and its listing as a REIT is approved by the Exchange.
A REIT shall be taxable on all income derived from sources within and without the Philippines at the applicable income tax rate of 30 percent as provided under Section 27(A) of the Tax Code on its taxable net income.
In no case, shall a REIT be subject to a minimum corporate income tax.
In computing the income tax due of a REIT, the following formula is to be used: Gross Income Less Allowable Deductions and Dividends Paid. The Dividends allowed as deductions during the taxable year shall pertain to dividends actually distributed out of the REIT’s distributable income at any time after the close of but not later than the last date of the 5th month from the close of the taxable year.
Any dividend distributed within this prescribed period shall be considered as paid on the last day of REIT’s taxable year.
The REIT shall be required to place in escrow in favor of the BIR with an Authorized Agent Bank acceptable to the BIR the income tax collectible from the REIT on the dividend it declared and deducted from its taxable income for the first and second year of the REIT prior to its attaining the minimum ownership of 67 percent had it been disallowed.
The escrowed income tax amount shall be released to the REIT only upon showing of proof of compliance to the increase of minimum ownership to 67 percent within three years from its listing, otherwise, it shall be released in favor of the government.
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