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TAX incentives on real estate investment trusts (REIT) may create
more opportunities for tax arbitrage among capital market players,
the Department of Finance said, as it bucked the proposed measure.
Finance Undersecretary Gil S. Beltran said the
attractiveness of a REIT should stand on its own merits as seen by
the prospective investors rather than on the incremental income
resulting from tax savings.
“Keeping taxation as neutral as possible
becomes critical in ensuring a level playing field among players in
an industry or among similar industries,” Beltran said in position
letter sent to the Senate.
Sen. Edgardo Angara last year filed a bill
seeking tax perks on REITs.
Beltran said in Japan and in the US, the success
of the Real Estate Investment Co. does not necessarily depend on the
generous tax incentives but rather on the other equally important
considerations such as the organizational structure, regulatory
environment, corporate government issues and distribution rules.
The official also said the finance department
has reservations on the proposal to cut the income tax rate to 25
percent on a portion of the corporate income tax of REITs, adding it
is wary about exempting overseas Filipinos from the dividend tax.
“We believe that there is a need to temper the
proposed tax incentive under the proposed substitute bill. Everyone
who earns interests or dividends or capital gains is subject to
income tax,” Beltran said.
-- Chino S. Leyco
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