The Construction Ministry has proposed the Government to set up real estate investment trust funds to help raise capital for the property industry.
The proposal is part of the housing development project that will be implemented by 2020. The ministry is set to ask for the Government permission on the project.
Real estate investment trust (REIT) is a tax designation for a corporate entity investing in real estate that reduces or eliminates corporate income taxes. In return, REITs are required to distribute 90 per cent of their income, which may be taxable, into the hands of investors.
The ministry said that REIT would help verify the sources that are available to raise capital for housing projects, instead of relying on source from commercial banks.
Phan Thanh Mai, general director of the property investment fund VPREIT, said that the establishment of REITs in Viet Nam was essential when many investors were paying attention to property.
Mai said that the trust fund was popular and worked effectively in developed countries. For example, the US Congress passed legalisation that allowed for the establishment of REITs in 1960. Now there are 300 REITs and two-thirds of them are publicly traded companies that have more than US$300 billion in total capitalisation.
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