Congress mulls amendment of REIT law

MANILA — The House of Representatives may push for the amendment of the Real Estate Investment Trust (REIT) Act, Representative Arthur Yap said Monday.

During the real estate market briefing of Leechiu Property Consultants (LPC), Yap said the lower house may opt to amend the REIT law and specify that the transfer of assets into REITs will be tax-free and be exempted from value-added tax (VAT).

Yap, who is also the chair for House Committee on Economic Affairs, said the REIT law would have to undergo the same process and “will have to fall in line” along with other bills in the Congress if it would amend the law.

The Republic Act No. 9856 was enacted in 2009 to encourage the investing public to invest in property projects and to further develop the capital market.

However, REIT has yet to take off in the country due to uncertainties like whether the transfer of asset should be subject to the 12-percent VAT.

Under the term of former Bureau of Internal Revenue (BIR) Commissioner Kim Henares, her office issued a memorandum order that the transfer of asset under REIT will be slapped with VAT.

Yap stressed that Congress would stick to imposing the law and giving a tax-free transfer of asset and also exempted from VAT as it recognized that there is no gain or loss on the initial transfer for the income purposes.

He said the House Committee on Economic Affairs is waiting for the recommendation and final position of the BIR.

“The BIR is working right now very hard, with what the interpretation of the BIR would be; on whether the first transfers of the asset into the REIT will be VATable or not,” Yap said.

“I, on my part, I feel that I would have to issue a committee report by this October on the status of the REIT,” he added.