THE Bureau of Internal Revenue (BIR) said the tax regulations for Real Estate Investment Trusts (REIT) due on June 30 will see a slight delay owing to the insistence of the congressional oversight committee to review the guidelines once these are out.

“They want to see the draft. The original schedule for June 30 will be delayed a bit,” BIR Commissioner Kim Henares told reporters in an interview on Friday.

Henares, however, still hopes the rules will be ready for public dissemination by next month.

This will pave the way for the implementation of the law that will allow firms, such as real-estate developers, to make public certain property assets, like shopping malls and office buildings.

Firms can use fresh capital raised from these activities to expand their businesses while giving the public the opportunity to invest in mature real-estate assets that provide relatively steady returns.

Based on the law, a REIT is required to pay shareholders 90 percent of its distributable income as dividends, meaning only the remaining amount will be subject to the 30-percent income-tax rate.

However, it remains to be seen how enthusiastic these developers will be in tapping the law, given the BIR’s plan to impose the 12-percent value-added tax (VAT) on one-time property transfers to a REIT.  Henares reiterated that the final rules will include VAT on property transfers, but this will only depend on the classification of the property.

“If it’s an ordinary asset, there is VAT. The [tax] is not dependent on the REIT but on the nature of the property,” Henares said.

Based on the Tax Code, ordinary pieces of property refer to those used in the trade or business, or as an income source for the owners.

As such, private-sector players had expected REITs to be exempted from this particular tax measure, which, they said, would make the law less attractive.

Among those that expressed interest in the law are Ayala Land Inc., SM Prime Holdings Inc. and Robinsons Land Corp.

Another area of concern among these developers is the Department of Finance’s (DOF) insistence that REIT firms raise their free-float level from 40 percent upon listing to 67 percent in three years, forcing the company to give up majority control.

The 40-percent initial public float is already the result of compromise talks between the private sector and the fiscal government.

The original rules approved by the Securities and Exchange Commission last year required an initial public float of only 33.3 percent, but the DOF balked at the provision, saying the amount was insufficient to allow the broader population to participate in the law.

The DOF is concerned that the REIT law, passed in late 2009, would erode government revenues due to the tax perks involved.