REIT Lapses into Law
Posted by Atty. Jojo on December 23, 2009
The bill providing the regulatory or legal framework for Real Estate Investment Trusts (REIT) lapsed into law last December 17, 2009 according to the Office of the President. REITs are companies that own and operate income-producing real-estate assets such as apartment buildings, hotels, shopping malls and even highways that collect toll fees.
Under Section 27 (1), Article VI of the Constitution, every bill that Congress passed shall be presented to the President for his/her approval or veto. If the he approves the bill, he shall sign the same. On the other hand, if the bill is not vetoed within 30 days after date of receipt of the said bill then “it shall become a law as if he had signed it.”
The REIT Law is now Republic Act No. 9856. It allows companies to publicly list their income-generating real-estate assets in the stock market as a means to generate fresh capital to invest further in real estate assets for the benefit of the investing public. The law provides certain tax incentives to the REIT. However, in order to enjoy these incentives, the REIT must be listed with a stock exchange and maintain its status as a listed company and annually give out at least 90 percent of its distributable income to shareholders
The law is another piece of legislation that hopes to spur the development of the local capital market. The Implementing Rules and Regulations (IRR) will be issued by the Securities and Exchange Commission (SEC), and the tax features will be crafted by the (DOF) Department of Finance and the Bureau of Internal Revenue (BIR) within 90 days from the date of approval of the law – roughly on or before March 17, 2010.