A stagnant economy, persistent high interest rates, hybrid working arrangements, electricity constraints, poor municipal service delivery and infrastructure maintenance all contribute to the growth challenge faced by real estate investment trusts (REITs). BDO’s REIT tax team understands changing market conditions in South Africa and abroad, as well the challenges they present. BDO’s REIT tax team’s involvement with our various REIT clients, as well as participation in organisations and industry-specific tax contributions, keeps us abreast of the current political, economic and market events impacting our clients.

Our REIT tax team can assist you on all tax aspects affecting REITs, covering the full property investment journey, from small property companies to the largest JSE-listed REITs and their investors.

Tax legislation governing REITs is designed to treat REITs as profit and capital gain flow-through vehicles, leaving the REIT to focus on producing profits and growing capital. As with most tax laws, those governing REITs - which are intertwined with REIT listing requirements - are complex and unforgiving of ignorance. Let BDO’s REIT tax team guide you on your REIT tax journey.

Some of the current tax challenges facing REITs, which pose a real threat to REITs’ favourable tax treatment, include:

• Maintaining a 75% ‘rental income’ level
• Maintaining a 75% distribution level
• Maintaining asset and debt level listing requirements
• Subsidiary level funding structures threatening the above
• Venturing offshore into uncharted tax territories
• Controlled foreign company tax legislation which has not kept up with the times
• Facing provisional tax underestimation penalties
• Dealing with a revenue authority under pressure to collect.

Our REIT tax team has extensive experience in servicing REITs’ tax needs with 19 years of listed property tax advisory experience at tax partner level. We look forward to being part of your REIT journey.