SL – REITs tax proposals to entice property companies
View(s):Amendments to the Inland Revenue Act (IRD) on tax incentives to support the newly introduced SL-REITs (Sri Lanka Real Estate Investment Trusts) have already stirred property companies to get on board, Securities and Exchange Commission (SEC) officials said.
”The SEC submitted budget proposals and other representations to the Ministry of Finance on SL- REITS and some property companies are quite interested and are awaiting the gazette on the tax,” Viraj Dayaratna, Chairman SEC told the Business Times recently.
He added that listed corporates and market participants were requested to submit proposals and recommendations they wished to be considered and included in the National Budget which were also submitted to the Ministry of Finance along with the proposals submitted by the SEC.
The SEC can now license a managing company to set up a SL- REITs along with a bank nominated by the company to act as a trustee for the trust, to be created by a trust deed. The managing company needs to then apply for an IPO to list on the Colombo Stock Exchange (CSE), Mr. Dayaratne said. Only completed, construction projects with 20 per cent occupancy and already generating an income will be admissible for SL- REITs.
The final policy to enable repurchase agreement (REPO) transactions on Corporate Debt securities on the Over-The-Counter (OTC) Platform of the CSE was finalised jointly with the CSE. Mr. Dayaratna said that approval in-principle was granted to the CSE to implement this mechanism. ”This is to activate the corporate debt market via the CSE after the Unit Trust Association along with certain commercial banks and Primary Dealers requested the CSE to implement a REPO transaction mechanism for corporate debt securities through the OTC trading platform on the CSE.”
The SEC has provided in-principle approval to facilitate paper gold trading through CSE OTC platform based on a proposal submitted by the CSE with an objective of diversifying investment product types available for potential investors and improving market activity levels. As part of the proposed transaction fee structure of paper gold there is a government levy which would bring additional tax revenue to the government.
Licensed commercial banks will be the issuers of paper gold and eligible investor categories will be decided in consultation with the Central Bank. Non-resident investors, holders of Business Foreign Currency Accounts and Personal Foreign Currency Accounts would be permitted to invest in this instrument, Mr. Dayaratna said. (DEC)