Tax notes: What is Real Estate Investment Trust?

THE Securities and Exchange Commission has approved the Implementing Rules and Regulations (IRR) of Republic Act 9856 or Real Estate Investment Trust (REIT) Act of 2009, which provides the regulatory and tax framework for REITs in the Philippines.

An REIT is a stock corporation that owns the income-generating real estate assets.

Updates on President Benigno Aquino III's presidency

The IRR clarifies that although an REIT is designated as a “trust,” it does not have the same technical meaning as “trust” under existing laws.

To be considered an REIT, the company must be listed on the stock exchange and must maintain its status as a listed company. It must have at least 1,000 public shareholders, each with at least 50 shares of any class and who, in the aggregate, must own a third of the REIT’s outstanding shares.

An REIT should have a minimum capitalization of P300 million, and must dispense 90 percent of its distributable income—defined as net income adjusted for unrealized gains or losses—as dividends yearly. (Source: Punongbayan & Araullo)