Real Estate Investment Trusts in Singapore
Real Estate Investment Trusts in SingaporeUpdated on Monday 12th September 2016
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Real estate investment trusts (REITs) are companies gaining income from investing in real estate products. In Singapore, REITs fall under the category of collective investment schemes which allow investors to put money into real estate property. Most of these properties are commercial buildings, shopping malls, and even office space which usually generate a generous income. REITs in Singapore fall under the Collective Investment Schemes Code and the Securities and Futures Law.
Our law firm Singapore can offer more information on the legislation related to real estate investment trusts.
How to set up a REIT in Singapore
First of all, a Singapore REIT must be managed by a qualified professional, usually a trustee or a management company with a registered office in the city-state. REITs can also be listed on the Singapore Stock Exchange, provided that certain requirements are met. Our attorneys in Singapore can provide more information on the listing requriements available for trading on the local Stock Exchange.
In order to establish a REIT in Singapore, the company’s shareholders must make available funds worth a minimum 1 million SGD. The REIT may invest in the following:
- - real estate, which can be within or outside Singapore;
- - assets related to real estate property;
- - unlisted or listed securities;
- - governmental securities;
- - cash.
Also, at least 75% of the REITs’ funds must be invested in real estate which generates income. Our attorneys in Singapore can offer more information on the restrictions REITs are subject to.
Taxation of real estate investment trusts in Singapore
Foreign and local participants in REITs in Singapore benefit from several tax advantages. Among these, tax exemptions on the dividends distributed by the trust. However, the REIT must distribute 90% of its chargeable income in order to benefit from this exemption. Where this provision does not apply, foreign investors will be subject to a 10% tax rate. Listed REITs may benefit from stamp duty exemption when selling properties in their portfolio, but also when transferring shares in SPVs (special purposes vehicles) owning real estate outside Singapore. Trustees will be subject to the corporate tax in Singapore.
For assistance in setting up a real estate investment trust or more information on the taxation of these investment funds, please contact our lawyers in Singapore.