In his recent state of the nation address (SONA), President Marcos pushed for the passage of PIFITA into law. Among its provision is the imposition of a single rate of 15% tax (generally) on interest income, dividends and capital gains.

For those who receive quarterly dividend income from REITs, this would mean an increase from the current 10% tax. I wouldn’t mind paying that extra 5% tax as long as it is spent appropriately. Even at the higher rate, REIT dividend income still compares favorably to wages which are taxed at 20-35% or to corporate income which is taxed at 20-25%.

PIFITA is part of the proposed tax reform agenda aimed at streamlining taxation and increasing government revenue. If this results in more public and private investment and helps the Philippines attain upper middle income status, then I’m all for it. But I do wonder if the REIT sponsors and majority shareholders will lobby hard to keep the current 10% tax on REIT dividends – which was designed as an incentive to grow the whole REIT ecosystem and promote construction and job creation in the first place. If passed into law, I don’t think it will discourage me from continuing to invest in REITs for passive dividend income.