CIMB sees cut in REIT withholding tax on dividends

PETALING JAYA: CIMB Investment Bank Bhd
expects the Government to reduce the withholding tax on dividends for
real estate investment trusts (REITs) in the upcoming Budget 2013.
The
bank's economic research head, Lee Heng Guie, said in a report that
this would be implemented to boost the local REITs market.
“The
current withholding tax rates are 10% for resident individuals, 10%
each for non-resident individuals and non-resident institutional
investors as well as 25% for non-resident corporate. In comparison,
Singapore's REIT investors are exempted from withholding tax and, in
Hong Kong, the withholding tax system no longer exists,” he said.
Lee
pointed out that the industry had been lobbying the Government for
years on the tax reduction. Recently, several notable REITs industry
players also called for the relaxation of the withholding tax
structure, in a bid to encourage more foreign interest in the sector.
However, a tax reduction also would mean less revenue collected by the Government for public expenditure.