Sep 25 2012, 02:59 PM
Sing ka poh no Reits tax one worr!
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Tax break for M-REITs?
PETALING JAYA: Malaysian real estate investment trusts (M-REITs) are hoping for further relaxation of the withholding tax structure for investors in the upcoming budget in order to encourage more foreign interest in the sector.
Axis REIT Managers Bhd CEO and executive director Stewart Labrooy said there was a withholding tax of 10% for individuals while in Singapore there was not.
“Also, in Singapore, the corporate tax rate is lower than Malaysia and so dividends to non-resident corporate unitholders in Singapore attract a lower tax rate (17% versus 25%),” said Labrooy, who is also the chairman of the Malaysian REIT Managers Association.
According to a UOA REIT spokesperson, the abolishment of withholding taxes for foreign investors can ensure a level playing field with Singaporean REITs.
“As it is, foreign participation in M-REITs remains low.”
Sunway REIT Management Sdn Bhd chief executive officer Datuk Jeffrey Ng said he hoped there would be further relaxation of the withholding tax structure in the individual category, in order to encourage the participation of retail investors.
Ng also urged the Government to consider offering incentives to sponsors involved in incubation of assets to be injected into REITs, such as the waiver of stamp duty for the purchase of assets for the purpose of incubation by the sponsor.
A sponsor is the entity (usually the parent company or property developer) that injects assets into the REIT portfolio.
“This will encourage the incubation of assets by the sponsor in order to provide pipeline assets to the REITs over the medium to long-term horizon, to ensure that the REITs will continue to grow.
Ng noted also that based on the prevailing withholding tax structure, Malaysia is equally competitive as Singapore for both resident or non-resident institutional investors.
“It is crucial to ensure the competitiveness of this category because REITs are primarily invested by institutional investors,” said Ng.
However, Labrooy believed that the options available to the Government to provide incentives and further reduce taxes (with a corresponding fall in government revenue) will be limited.
“I am therefore putting my wish list for Budget 2013 on hold until after the general election, and perhaps once the goods and services tax is implemented when there will be more room to provide incentives through tax breaks and increase government expenditure while balancing the budget.
“It will be painful but necessary,” said Labrooy.
Meanwhile, property consultancy CB Richard Ellis (M) Sdn Bhd executive director Paul Khong said the Government should look at its asset register and select “big chunky office buildings occupied by the Government” to sell by tender to the investment community.
“Also, there should be a review of the registration requirements on leases over three years in order to encourage longer term lease tenures wherever appropriate.”
http://biz.thestar.com.my/news/story.asp?f...19&sec=business
REIT V4, Real Estate Investment Trust
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