Question & AnswerQ&A (Republic Act No. 9856)
The short title of Republic Act No. 9856 is "The Real Estate Investment Trust (REIT) Act of 2009."
The policy is to promote the development of the capital market, democratize wealth by broadening Filipino participation in real estate ownership, finance infrastructure projects through the capital market, and protect investors with an enabling regulatory framework.
A REIT is a stock corporation established under the Corporation Code and the Commission's rules, principally owning income-generating real estate assets. It is designated as a 'trust' for international descriptive purposes but does not have the same technical meaning as 'trust' under Philippine laws.
A REIT must have at least one thousand (1,000) public shareholders each owning at least fifty (50) shares and collectively owning at least one-third (1/3) of the outstanding capital stock of the REIT, maintaining listed status at all times.
The REIT must distribute at least ninety percent (90%) of its distributable income annually as dividends to its shareholders, payable not later than the fifth month following the fiscal year-end.
Allowable investments include Philippine real estate (freehold or leasehold), up to 40% in foreign real estate upon special authority, real estate-related assets, managed funds, government securities, cash and cash equivalents, and other outlets approved by the Commission.
Penalties include fines ranging from Php 200,000 to Php 5,000,000, imprisonment from six years and one day to twenty-one years, or both. Additional administrative, civil, or criminal liabilities under other laws may also apply.
REITs are subject to income tax on taxable net income but are exempt from the minimum corporate income tax. Dividend distributions within five months after the taxable year are considered paid on the last day of the taxable year. Failure to comply with public company status, listing, or dividend distribution may result in losing these benefits.
REITs owning Philippine land must comply with foreign ownership limitations imposed under Philippine law, ensuring adherence to nationality and ownership restrictions.
A REIT fund manager must be independent, have at least Php 10 million paid-up capital, operate a Philippine office performing accounting, compliance, and investor relations functions, comply with corporate governance and fit and proper rules, avoid conflicts of interest, and employ professional staff with relevant financial and real estate experience.