[ Philippine REPUBLIC ACT No. 9856 ] The Real Estate Investment Trust (REIT) Act of 2009. AN ACT PROVIDING THE LEGAL FRAMEWORK FOR REAL ESTATE INVESTMENT TRUST AND FOR OTHER PURPOSES.
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SEC. 9. Reportorial and Disclosure Requirements. –
9.1 Requirements – The REIT shall comply with the reportorial and disclosure requirements prescribed by the Corporation Code, the SRC and the Exchange. At the minimum, the REIT shall disclose the following information:
i. Material contracts as defined under Section 3 of this Act
ii. Allowable investments of the REIT under Section 8.3 hereof;
iii. Related party transactions under Section 8.11 hereof;
iv. Contracts between the REIT and fund manager or the property manager, including the identity of the parties, contract price, fees and the other basic terms of the contract;
v. Valuation of the real estate properties of the REIT, including the valuation methodology used therefore;
vi. Material changes in the income stream of the REIT;
vii. Any fee received by any party relating to the acquisition or disposition of the real estate of the REIT;
viii. Merger, consolidation, joint venture, takeover or spin-off involving the REIT;
IX. Any modification of the rights of the holders of any class of securities issued by the REIT and the corresponding effect of such modification upon the rights of the holders;
x. Any declaration of cash dividend, stock dividend, property dividend and pre-emptive rights by the REIT;
xi. Appointment of a receiver or liquidator for the REIT;
xii. Change in control of the REIT;
xiii. Losses or potential losses which amount to at least five percent (5%) of the deposited property of the REIT;
xiv. Occurrence of any event of dissolution with details in respect thereto;
xv. Acts or facts that might seriously impair the business activities of the REIT;
xvi. Creation of mortgages, pledges or liens on the properties of the REIT;
xvii. Any development activity undertaken by the REIT, including the essential details thereof;
xviil. Direct and indirect ownership of directors and principal officers in the securities of the REIT;
xix. Any amendment to the articles of incorporation and bylaws of the REIT; and
xx. Any planned acquisition of outstanding shares or disposition of treasury shares of the REIT.
9.2 Special Quarterly and Annual Reports – In addition to the quarterly and annual reportorial and disclosure requirements prescribed for public and listed companies, the REIT shall make a report on and disclose the following to the Commission and the Exchange:
i. Summary of all real estate transactions entered into during the period, including the identity of the parties, the contract price, and their valuations, including the methods used to value the assets;
ii. Summary of all the REIT’s real estate assets, including the location of such assets, their purchase prices and the latest valuations, rentals received and occupancy rates, and/or the remaining terms of the REIT’s leasehold properties;
iii. Comparative summary of the financial performance of the REIT covering various time periods (e.g. quarterly, one (1)-year, three (3)-year, five (5)-year or (10)-year).
9.3 REIT Plan – The REIT plan or prospectus shall comply with the requirements of the SRC and disclose the risks specific to investing in REITs.
9.4 Failure of Compliance – Failure to comply with reportorial and disclosure requirements shall subject the REIT to the applicable penalties under the SRC and the rules of the Exchange, without prejudice to the filing of the appropriate administrative, civil or criminal action under this Act or existing laws.
TAXES AND OTHER RELATED ISSUES
SEC. 10. Income Taxation of REITs. – A REIT shall be subject to income tax under Chapter IV, Title II of the National Internal Revenue Code of 1997, as amended, on its taxable net income as defined in this Act: Provided, That in no case shall a REIT be subject to the minimum corporate income tax, as provided under Section 27(E) and Section 28(A)(2) of the same Code: Provided, further, That for purposes of computing the taxable net income of a REIT, dividends distributed by a REIT from its distributable income after the close of a taxable year and on or before the last day of the fifth (5″) month following the close of the taxable year shall be considered as paid on the last day of such taxable year.
A REIT shall be subject to the income tax on its taxable net income as defined in Chapter V, Title II of the National Internal Revenue Code of 1997, as amended, instead of its taxable net income as defined in this Act, upon the occurrence of any of the following events subject to such curing period as may be prescribed in the IRR of this Act:
i. Failure to maintain its status as a public company as defined in Section 8.1 of this Act;
ii. Failure to maintain the listed status of the investor securities on the Exchange and the registration of the investor securities by the Commission; and/or
iii. Failure to distribute at least ninety percent (90%) of its distributable income required under Section 7 of this Act.
SEC. 11. Creditable Withholding Tax. – Income payments to a REIT shall be subject to a lower creditable withholding tax of one percent (1%).
SEC. 12. Transfer of Real Property. – Any existing, law to the contrary notwithstanding, the sale or transfer of real property to REITs, which includes the sale or transfer of any and all security interest thereto, shall be subject to fifty percent (50%) of the applicable Documentary Stamp Tax (DST) imposed under Title VII of the National Internal Revenue Code of 1997, as amended.
All applicable registration and annotation fees to be paid, related or incidental to the transfer of assets or the security interest thereto, shall be fifty percent (50%) of the applicable registration and annotation fees.
The incentives granted under this section can be availed of by an unlisted REIT, provided it is listed with an Exchange not later than two (2) years from the date of the initial availment of the incentives.
The fifty percent (50%) of the applicable DST shall nevertheless be due and demandable together with the applicable surcharge, penalties, and interest thereon reckoned from the date such taxes should have been paid upon the occurrence of any of the following events subject to such curing period as may be prescribed in the IRR i of this Act:
i. Failure to list with an Exchange within the period prescribed in this section;
ii. Failure to maintain its status as a public company as defined in Section 8.1 of this Act;
iii. Failure to maintain the listed status of the investor securities on the Exchange and the registration of the investor securities by the Commission; and/or
iv. Failure to distribute at least ninety percent (90%) of its distributable income required under Section 7 of this
SEC. 13. Issuance and Transfer of Investor Securities. – The following rules shall apply:
i. The original Issuance of investor securities shall be subject to DST under Title VII of the National Internal Revenue Code of 1997, as amended;
ii. Any sale, barter, exchange or other disposition of listed investor securities through the Exchange, including block sales or cross sales with prior approval from the Exchange, shall be subject to the stock transaction tax imposed under Section 127(a) of the National Internal Revenue Code of 1997, as amended;
iii. Any sale, barter or exchange or other disposition of listed investor securities through the Exchange, including block sales or cross sales with prior approval from the Exchange, shall be exempt from the DST prescribed under Title VII of the National Internal Revenue Code of 1997, as amended; and
iv. Any initial public offering and secondary offering of investor securities shall be exempt from the tax imposed under Section 127(b) of the National Internal Revenue Code of 1997, as amended
SEC. 14. Dividends Paid by REITs. – Cash or property dividends paid by a REIT shall be subject to a final tax of ten percent (10%), unless: (a) the dividends are received by a nonresident alien individual or a nonresident foreign corporation entitled to claim a preferential withholding tax rate of less than ten percent (10%) pursuant to an applicable tax treaty; or (b) the dividends are received by a domestic corporation or resident foreign corporation, or an overseas Filipino investor in which case, they are exempt from income tax or any withholding tax: Provided, That in the case of overseas Filipino investors, they are exempt from the dividends tax for seven (7) years from the effectivity of the tax regulations implementing this Act.
SEC. 15. VAT on Gross Sales or Gross Receipts of REITs. – A REIT shall be subject to value-added tax (VAT) imposed under Title IV of the National Internal Revenue Code of 1997, as amended, on its gross sales from any disposal of real property, and on its gross receipts from the rental of such real property. A REIT shall not be considered as a dealer in securities and shall not be subject to VAT on its sale, exchange or transfer of securities forming’ part of its real estate-related assets.
SEC. 16. General Application of the National Internal Revenue Code of 1997, as amended. – Unless otherwise provided under this Act, the internal revenue taxes under the National Internal Revenue Code of 1997, as amended, shall apply.
SEC. 17. Delisting of REITs. – In the event the REIT is delisted from the Exchange, whether voluntarily or involuntarily, for failure to comply with the provisions of this Act or rules of the Exchange, the tax incentives granted under this Act shall be ipso facto revoked and withdrawn as of the date the delisting becomes final and executory and any tax incentives that may have been availed of by the REIT thereafter shall immediately be refunded to the Government and the surcharge and penalty prescribed by Section 19 hereof shall apply. If the delisting is for causes highly prejudicial to the interest of the investing public such as violation of the disclosure and related party provisions of this Act or insolvency of the REIT due to mismanagement or misappropriation, conversion, wastage or dissipation of its corporate assets, the responsible persons shall refund to its investors at the time of final delisting the value of their shares.
SEC. 18. Revocation of Registration. – If the Commission finds out that the REIT was established so as to seek the benefits of this Act without a true, intention to carry out its provisions and/or the IRR, the Commission shall revoke or cancel the registration of the securities of the REIT. The REIT shal1 pay the applicable taxes plus interests and surcharges under the National Internal Revenue Code of 1997, as amended.
SEC. 19. Penalties. – A fine of not less than Two hundred thousand pesos (Php200,000.00) nor more than Five million pesos (Php5,000,000.00) or imprisonment of not less than six (6) years and one (1) day nor more than twenty-one (21) years, or both at the discretion of the court, shall be imposed upon any person, association, partnership or corporation, its officer, employee or agent, who, acting alone or in connivance with others, shall:
i. Understate or overstate the financial statements of the
ii. Cause any loss, conversion, misappropriation of the assets, securities or income of the REIT;
iii. Use another person to hold the legal title of the shares of the REIT for his benefit for the purpose of circumventing the minimum public ownership prescribed in Section 8.1 of this Act;
iv. Allow himself to be used by another person to hold legal title to the shares of the REIT for the purpose of circumventing the minimum public ownership prescribed in Section 8.1 of this Act;
v. Submit false or misleading certification on the minimum public ownership required by this Act; or
vi. Violate any of the provisions of this Act, or the rules and regulations promulgated under authority hereof.
If the offender is a corporation, partnership or association or other juridical entity, the penalty may, at the discretion of the court, be imposed upon such juridical entity and/or upon the officer or officers of the corporation, partnership, association or entity responsible for the violation, and if such officer is an alien, he shall in addition to the penalties prescribed, be deported without further proceedings after service of sentence.
The prosecution and conviction of the offender under this Act and the imposition of the above penalties shall be without prejudice to the administrative, civil and criminal liabilities of the offender under the SRC.
SEC. 20. Corporate Governance. – The REIT property manager and the REIT fund manager shall be subject to the principles of corporate governance adopted by the proper regulatory body.
SEC. 21. Use of Registration Fees. – To carry out the purposes of this Act, the. Commission shall retain and use fifty percent (50%) of all fees paid to it, relative to the establishment of REITs and the registration of their securities in addition to its annual budget.
SEC. 22. Implementing Rules and Regulations. – Within ninety (90) days from the effectivity of this Act; the Commission, in coordination with the Bangko Sentral ng Pilipinas (BSP) and the Department of Finance (DOF) and in consultation with other stakeholders such as the Philippine Stock Exchange. and the real estate industry shall promulgate the implementing rules and regulations of the provisions of this Act: Provided, That the Commission, the BSP and the DOF may continue to issue separate regulations that will apply exclusively to the institutions under their respective jurisdiction, consistent with the implementing rules and regulations: Provided, further, That ,the Commissioner of the Bureau of Internal Revenue shall issue the lRR regarding all tax provisions of this Act (Tax Regulations), subject to the review of the Secretary of Finance, in accordance with Section 4 of the National Internal Revenue Code, as amended, after full and complete consultation with all sectors concerned.
SEC. 23. Separability Clause. – If, for any reason, any article or provision of this Act or any portion therefore or application of such article, provision or portion thereof to any person, group or circumstance is declared invalid or unconstitutional, the remainder of this Act shall not be affected by such decision.
SEC. 24. Repealing Clause. – All laws, executive orders, rules and regulations and parts thereof which are inconsistent With this Act are hereby repealed or amended accordingly.
SEC. 25. Effectivity Clause. – This Act shall take effectfifteen (15) days after its complete publication in the Official Gazette or in at least two (2) newspapers of general circulation in the Philippines.
(Sgd.) PROSPERO C. NOGRALES
Speaker of the house of Representatives
(Sgd.) JUAN PONCE ENRILE
President of the Senate
This Act which IS a consolidation of Senate Bin No. 2639 and House Bill No. 6379 was finally approved by the Senate and the House of Representatives on September 29, 2009 and September 30, 2009, respectively
(Sgd.) MARILYN B. BARUA-YAP
Secretary General House of Representatives
(Sgd.) EMMA LIRIO-REYES
Secretary of the Senate
President of the Philippines
*Lapsed into law on DEC 17 2009 without the signature of the President
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