#REIT #Malaysia. In turn, would provide stable dividends to unitholders!

Malaysia: Maybank IB Research believed that the revision in the Inland Revenue Board of Malaysia's (IRB) Taxation of Real Estate Investment Trust (REIT) may lift initial public offering (IPO) interests for unlisted REITs in Malaysia.

The new ruling states that REITs which are not listed on Bursa Malaysia would no longer enjoy any tax exemption even if the funds distribute 90 per cent or more of their total income to unitholders, versus the previous ruling which allows tax exemptions for listed and unlisted REITs.

Maybank IB said the ruling change has no impact to existing listed REITs whereby all REITs have been distributing 90 per cent or more of their income as dividends.

Sourceful REIT count are there in Malaysia?

It said while changes are minimal, there is a significant ruling change relating to corporate taxation.

"This ruling change may however lift IPO interests for unlisted REITs in Malaysia. The withholding tax rates for distributions received by unitholders are unchanged," it said.

Maybank IB said the revised ruling has spelled out clearer definitions and rulings on REIT which establishes special purpose vehicles solely for the issuance of sukuk.

It said this ruling defines that trusts have the rights to receive and utilise any proceeds derived from the issuance of sukuk.

"We are neutral on this additional ruling. Elsewhere, the other taxation rulings from the latest Public Ruling have remained the same," it said.

Maybank IB remains positive on REIT sector as a defensive play.

"We expect the sector to maintain its resilient rental income particularly from properties with long-term tenants and leases".

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