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 |