The Federal Government has been called upon to discontinue the imposition of certain taxes on Real Estate Investment Trust, REIT, as this will ensure the growth and success of the REITs as an asset class.

Speaking at a seminar on REIT in Lagos, with the theme: “Unlocking the Opportunities in the Real Estate Sector”,  organised by FSDH Asset Management Limited, Mrs. Olumayowa Ogunwemimo, Managing Director, FSDH Asset, contend that the income on REIT should not be taxed in the hands of the fund manager but in the hands of the beneficiary.

“That is the standard practice worldwide. If a company invests in a REIT, whatever income they earn from the REIT must be taxed from the company income tax. If an individual invest in a REIT the income he earns from the REIT, should be taxed using the company income tax act in the hand of the investor.”

“If you want to tax the REIT the only tax that is applicable is company income tax, which in that case is not beneficial to an individual who wants to invest.  What I am saying is that REIT should be taxed in the hands of the investor not in the hands of the fund managers because really REITs are pass-through vehicles.”

Continuing, Ogunwemimo explained that the purpose for the seminar is to bring together regulators, Chief Executives and Chief Investment Officers of asset management, pension management and insurance companies, as well as leading property development companies to discourse how to move the sector forward.

She said, “In a REIT structure, you have different parties, developers, investors and regulators. So it is important for us to come together and explore initiatives that will take the sector to the next level.

Drive for bank credit

“At the end of the day, a REIT is beneficial to the entire economy. More developers, means less drive for bank credit.

“The major focus of the forum is to educate the stakeholders on investment opportunities and challenges of investing in REIT in Nigeria. The stakeholders will also benefit from the firsthand experience of both local and international leading practitioners.

“We are doing this because we want to work with all stakeholders in the sector to see how we can move it forward.”

Issues discussed at the forum include the potential impact of REIT in Nigeria, taxation, property selection and regulations.