PR No 1 2021 Taxation of Unit Holders of REITs PTFs

Public Ruling No. 1/2021 – Taxation of Unit Holders of Real Estate Investment Trusts / Property Trust Funds

The IRB has issued Public Ruling (PR) No. 1/2021: Taxation of Unit Holders of Real Estate Investment Trusts / Property Trust Funds, dated 25 May 2021. The PR explains the tax treatment of distribution of income from real estate investment trusts (REITs) / property trust funds (PTFs) in Malaysia to unit holders. This new eight-page PR replaces PR No. 9/2018, which was published on 12 October 2018 (see Tax Alert No. 22/2018). The new PR comprises the following sections and sets out four examples:

1.0          Objective

2.0          Relevant provisions of the law

3.0          Interpretation

4.0          Tax at unit holders’ level

5.0          Filing of income tax return form

6.0          Updates and amendments

7.0          Disclaimer

The contents of the new PR are broadly similar to the earlier PR. Some of the key changes are as follows:

(a)   The definition of “person” has been updated to stipulate that it includes a company, a body of persons, a limited liability partnership, a corporation sole and a partnership. In the earlier PR, the definition of “person” included a company, a co-operative society, a club, an association, a Hindu Joint Family, a trust, an estate under administration, an individual and a partnership.

(b)  As outlined in the earlier PR, selected investors receiving profit distributions from REITs listed on Bursa Malaysia are taxed based on the following reduced withholding tax rates:

The new PR has been updated to reflect the extension of the reduced withholding tax rate until YA 2025, as per Budget 2020.