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Tax incentives needed for REITs

By on Jul 19, 2012 in Property News

The key factor in making real estate investment trusts (REITs) a new safe haven for investors will depend on setting tax incentives and revising the land lease period to more than the present 30 years, says Sorachon Boonsong, a partner at Baker & McKenzie.

Taxes imposed on REITs should be about 10%, similar to the international standard.

Mr Sorachon said the Securities and Exchange Commission is expected to finalise regulation measures for REITs and implement them in the third quarter.

“The new property investment product may not be sexy among investors, particularly for foreigners who have a huge amount of capital to invest in Asia, if factors such as taxes collected by the Revenue Department and the land lease period fail to meet the expectations,” said Mr Sorachon.

Thailand’s investment in property funds is in a transition period.  The country now has rules for the former type of property fund, which has strict regulations resulting in less flexibility and is different from the international standard for investment in property assets.  While the existing property fund type allows unitholders to enjoy a tax waiver on dividends earning, the dividend from REITs is in doubt.

Mr Sorachon said Western institutional investors are seeking havens for their money. Asia-Pacific is now one such place for them, as the region is home to many emerging economies such as China, India and Indonesia. As well, property investment in these countries remains strong compared with in the US and Europe.  REITs are recognised as one of the most conservative investments among property assets due mainly to their stable rental revenue.

For the full article, visit http://www.bangkokpost.com/property/news/302997/tax-incentives-needed-for-reits .

Source : Bangkok Post 18 July 2012

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