Yesterday, there was reports from Lippo Group CEO James Raidy that the group is taking its first steps to move their two REITs listed in Singapore, First REIT and Lippo Malls Retail Trust back to Indonesia. (Check out the two REIT dividend profile and debt profile here)
What is the double taxation about
This is to take advantage of the recent removable of double taxation law by the Indonesian Government. Previously the practice is that the government collects income tax from the property development company AND the special purpose company (SPV) who will issue the REITs with the underlying real estate business.
This taxation removal will see the the property development company and SPV be tax once, which means a removal of a current 15% SPV tax.
So you can see the appeal to take advantage.
This is inline with the government’s plan to allow the same financial engineering …