Malaysian REIT managers call for return of withholding tax relief in Budget 2027

KUALA LUMPUR (Sept 21): The Malaysian REIT Managers Association (MRMA) hopes the withholding tax break on real estate investment trusts (REITs) dividends will be restored in Budget 2027.

AmFIRST Real Estate Investment Trust (REIT) (KL:AMFIRST) manager and chief executive officer Chong Hong Chuon told reporters after its annual general meeting and extraordinary general meeting that the association had submitted its requests to the government, including a review of the tax treatment for REIT distributions.

Chong said the withholding tax mechanism is an important issue for the industry, particularly as REITs seek to attract investors and expand their portfolios.

“We've been lobbying for the government to relook into this proposal of putting back the [withholding] tax. 

"Some of us even challenge whether there's additional revenue that can be collected from the removal of this (withholding tax break),” he said. 

Chong also said the industry was seeking a tax structure that would be more supportive of REITs, noting that the implementation of the 8% sales and service tax (SST) had increased costs for businesses.

From 2016 to 2025, the withholding tax for REIT distributions to unit holders other than resident companies, including individuals and foreign institutional investors was set at 10%. 

The preferential treatment ceased this year and the tax treatment of distributions depends on the category of unit holder and prevailing tax rules. Resident individuals are taxed based on progressive income tax rates of between 0% and 30%, while non-residents face a higher flat rate of 30%.

AmFIRST REIT deputy CEO Zuhairy Md Isa said that the MRMA also proposed to raise the statutory gearing limit for REITs to 60% from 50%.

The proposal, he said, was intended to give REITs greater flexibility to undertake investments and support the development of the sector.

He said the withholding tax had put Malaysian REITs at a disadvantage against regional peers such as Singapore and Hong Kong, which do not impose the tax. 

“So, we feel that this will rejuvenate the REIT industry because without the withholding tax, we actually lost out to Singapore, Hong Kong and all the other REIT jurisdictions. 

"So, the only way is to make our REITs more competitive and, of course, support investors coming in because I think we need investors to invest in this,” said Zuhairy. 

At the time of writing on Monday, AmFIRST REIT’s shares were flat at 34 sen, valuing is at RM233.4 million.

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