"It is indeed a matter of pride for the Securities and Exchange Commission of Pakistan, as it has achieved another landmark by introducing the regulatory framework for Real Estate Investment Trusts."
In his massage on the occasion, SECP Chairman Razi-ur-Rehman Khan said that as regulator, our foremost objective is development of modern and efficient capital market and non-banking financial sector.
"Since inception our mission has been advancement of efficient and transparent regulatory framework, based on international legal standards and best practices, for the protection of investors and alleviation of systemic risk aimed at fostering growth of a full-bodied non-banking financial sector and broad based capital market in Pakistan," he said and added that REITs on one hand would allow the small investor to participate in the real estate projects as stakeholder while on the other, sooth the volatility and hype created in the real estate quarter.
He said that both rental and development REITs are predominantly tax-free vehicles as long as the REIT scheme distributes profit in accordance with the regulations formulated by SECP. As a financial instrument REITs are considered effectual as it generates high. "Distinct REIT structures are executed worldwide as real estate dynamics are country specific; hence we initiated 'Development REIT' which is a pioneering concept," he added. The idea behind is to increase economic activity by encouraging investment, initiating projects and return on the project is only taxed at the individual unit holder level, given that 90 percent of the net profit generated, is distributed to unit holders.
"In this regard we extend our gratitude to the Federal Board of Revenue for considering our proposals and eliminating the entity level tax. I, on behalf of the SECP, would like to express our deepest appreciation to all stakeholders who provided us with invaluable feedback to facilitate us in formulising the REITs regulations to suit market requirements", the SECP Chairman said. "Here at SECP our strategy is to develop a dynamic regulatory body that promotes principles of good governance, ensures proper risk management procedures in the capital market and protects investors through receptive policy making," he said and added "we have the ability and resolve to match any foreign regulator and our devotion for excellence is reflected through our work."