Will tax incentives for REITs be rolled back in Budget 2015?

Dividends could crash if these incentives are rolled back.

The government’s stance on tax incentives for SREITs is a crucial point in the upcoming Budget 2015. Industry watchers believe that the government will extend these tax concessions to keep Singapore’s edge as a REIT hub.

S-REITs currently enjoy income tax exemption, foreign-sourced income tax exemption, and stamp duty waiver for Singapore properties. These clauses are due to expire on 31 March 2015, unless specifically revoked earlier.

“Each concession is critical to the continued success of the REIT industry in Singapore and should be extended,” Deloitte noted in its 2015 Budget Wishlist.

Meanwhile, UOB warns that REIT dividends could plunge by as much a 17% while asset values might drop by as much as 3% if the government rolls back these incentives.

“The authorities will likely extend most tax incentives to maintain Singapore’s attractiveness as a regional REITs hub, as suggested by our channel checks with corporates, regulators and other industry participants. Only the removal of stamp duty waiver remains likely as the REIT market matures,” stated UOB.