REITs Association Requests Acquisition Tax Exemption Like Japan in Proposal to Ministry of the Interior and Safety

Korea: Applied from 2002 to 2014, then sunset
Japan: Reduction of acquisition and registration license taxes
"Encouraging the dispersion of speculative demand in real estate"

The Korea REITs Association has officially requested the government to reinstate the acquisition tax exemption for Real Estate Investment Trusts (REITs).

In a proposal submitted to the Ministry of the Interior and Safety on July 1, the association requested, "Please exempt REITs from acquisition tax on real estate, as was done in the past." The acquisition tax exemption for REITs was temporarily applied from the introduction of the REITs system in 2002 until the end of 2014, but was discontinued thereafter.

Structure of REITs. Provided by Korea REITs Association

REITs are indirect real estate investment vehicles that pool funds from the general public to invest in real estate and are required to distribute at least 90% of their profits as dividends. The association emphasized, "If the acquisition tax is exempted, REITs will have a greater capacity to pay dividends, which will increase investors' returns and have a positive impact on the national economy."

The association also stated, "Tax benefits for REITs will enhance investment accessibility and help disperse speculative demand currently concentrated in residential properties." Additionally, it said, "We expect this will expand the supply of rental housing, vitalize the REITs market, and create related jobs."

As an international example, the association cited Japan, which reduces acquisition and registration license taxes on real estate acquired by REITs to promote asset securitization.

The association stated, "REITs are a means to combine public interest with private capital, simultaneously promoting housing stability and economic recovery." It added, "From a public interest perspective, it is necessary to exempt REITs from acquisition tax when incorporating assets."

The Korea REITs Association requested the Ministry of the Interior and Safety on the 1st to exempt acquisition tax when REITs, which contribute to the national economy and the stability of housing for the common people, acquire assets. Changes when the Local Tax Special Cases Act is amended. Provided by Korea REITs Association