Support for REITs

The Ministry of Finance (MOF), the Inland Revenue Authority of Singapore (IRAS) and MAS have put in place new measures to provide real estate investment trusts listed on the Singapore Exchange (S-REITs) with greater flexibility to manage their cash flows and raise funds amid a challenging operating environment due to COVID-19.

Higher Leverage Limit and Deferral of Interest Coverage Requirement

MAS has raised the leverage limit for S-REITs from 45% to 50%, to provide S-REITs with greater flexibility to manage their capital structure amid the challenging environment.

MAS will defer the implementation of a new minimum interest coverage ratio (ICR) requirement to 1 January 2022, as S-REITs’ ICRs are likely to come under pressure in the near term due to the negative impact of the COVID-19 pandemic on their earnings and cashflows.

Extension of Permissible Period for Distribution of Taxable Income

MOF and IRAS had announced on 16 April 2020 that S-REITs would have an extended period of up to 12 months from the end of their financial year (FY) 2020 to distribute their taxable income derived in FY2020, to qualify for tax transparency treatment.

In view of the new rental reliefs under the COVID-19 Amendment Bill, MOF and IRAS will further extend the timelines for S-REITs to distribute their taxable income derived in FY2020 and FY2021. 

Original timeline Extended timeline announced on 16 April 2020 Further extension
FY ending in 2020 3 months after financial year end (FYE) 12 months after FYE 31 December 2021
FY ending in 2021 3 months after FYE No extension 31 December 2021 or 3 months after FYE, whichever is later