Saturday September 15, 2012
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.