Mainland Chinese real estate firms have been hoping for years to join the ranks of tax-privileged REITs around the world, but that’s unlikely to happen until China’s government stops relying so heavily on property transactions for its tax dollars.
China’s securities regulators have been all for REITs, but tax officials aren’t having it—and the government’s reliance on tax money has grown as the Chinese economy faces a slowdown.
“China has yet to develop a regulatory framework on asset transfers and tax exemptions that will help to foster a REITs market here,” Zhong Lun Law Firm's Anthony Qiao tells the Wall Street Journal.
REITs spare companies from corporate taxes by dishing out revenue directly to shareholders—a reason for a wave of REIT spinoffs in the US over the past year, until the US government banned the practice. [WSJ]
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