Singapore REIT's keeps property tax exemption in place
Singapore will extend tax incentives for real estate investment trusts by five years, allowing them to earn income from foreign properties without paying taxes.
The nation will also extend local tax exemptions for REITs, finance minister Tharman Shanmugaratnam said in his budget speech to Parliament. He indicated the government will resume charging the trusts stamp duties on Singaporean property purchases.
The extension of tax breaks will help Singapore-listed property trusts maintain their competitiveness versus peers in countries from Australia to China. More than 30 REITs and business trusts have listed in Singapore since 2002 amid tax-efficient investment structures.
To support the listing of REITs, Shanmugaratnam said he will extend income tax and goods-and-services tax concessions for five years, and enhance GST concessions to facilitate fundraising by special purpose vehicles set up by REITs.
By allowing the real estate trusts to continue to earn income from foreign properties without paying taxes, Singapore is extending a benefit first introduced about a decade ago that would have expired on March 31. When the incentive was first introduced, it was for an indefinite period. An expiry date clause was introduced in the nation's 2010 budget.
The government won't extend the exemption REITs have had since 2005 from paying stamp duties on Singapore properties. Trusts that have all their assets in the country will face a maximum duty of 3pc on the value of properties they acquire.
CapitaCommercial Trust, Singapore's biggest office REIT, has all its assets in the country. Others with only Singapore assets include Mapletree Industrial Trust and Far East Hospitality.
The FTSE Strait Times Real Estate Investment Trust Index gained 2.6pc this year. It climbed 9.2pc in 2014, its biggest annual advance in two years. (Bloomberg)