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Singapore Issues Revised REITS e-Tax Guide

by Mary Swire, Lowtax.net, Hong Kong
19 December, 2013

The Inland Revenue Authority of Singapore has issued a revision to its e-Tax guide that explains the income tax treatment for a real estate investment trust (REIT).

The guide, which will be relevant to the trustee, manager, unit holders or potential investors in a REIT, confirms that Singapore's Comptroller of Income Tax (CIT) will accord tax transparency treatment to a REIT on income distributed by the trustee, subject to certain conditions.

To enhance Singapore's tax regime for REITs, it was announced in Budget 2012 that from April 1, 2012, REIT distributions made to unit holders will not be taxed in the hands of the trustee of the REIT, but will only be taxed in the hands of the unit holders, unless the unit holders are specifically exempted from tax.

However, the trustee of a REIT has to apply to the CIT to enjoy the tax transparency treatment. Thus far, all applications are by way of advance ruling. With immediate effect, the trustee/manager of a proposed/newly constituted REIT or its sponsor needs only to submit an application form.

The tax transparency treatment is subject to the condition that the trustee distributes at least 90 percent of its taxable income to the unit holders in the same year in which the income is derived by the trustee.

On the other hand, the trustee of a REIT is taxed at the prevailing corporate tax rate on its income that does not qualify for tax transparency treatment. For example, income derived by the REIT but not distributed to the unit holders in the same year in which the income is derived; and other income, including gains from the disposal of any investments such as shares, which are determined by the CIT to be revenue gains chargeable to tax.

A comprehensive report in our Intelligence Report series giving a country-by-country analysis of offshore investment funds, stock exchanges and trusts, with an analysis of the US QI regime, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report9.asp
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