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- Under the current year of assessment (YA) 2016-2025 structure, most investors enjoy a 10% final withholding tax, resident corporations face 0%, and non-resident corporations 24%.
KUALA LUMPUR (Dec 3): Malaysia’s real estate investment trust (M-REIT) sector could lose its appeal if a long-standing withholding tax concession on REIT distributions expires on Dec 31, 2025, according to Maybank Investment Bank (Maybank IB).
Under the current year of assessment (YA) 2016-2025 structure, most investors enjoy a 10% final withholding tax, resident corporations face 0%, and non-resident corporations 24%.
In a note on Wednesday, the firm said the concession has been extended multiple times before, but authorities have so far been silent on it for YA2026.
Maybank IB said that if the concession lapses, REIT distributions would revert to marginal tax rates, which could cut post-tax yields by 50-100 basis points, lowering net returns for retail and institutional yield-seeking investors. This would reduce the competitiveness of M-REITs versus regional peers and deter foreign investors, even though the sector currently offers an attractive 5.7% dividend yield.
The firm said the Malaysian REIT Managers Association is expected to raise the matter with the Ministry of Finance as the year-end deadline approaches.
Maybank IB has ‘buy’ ratings on six of the eight M-REITs it covers, including Pavilion REIT (KL:PAVREIT) and YTL Hospitality REIT (KL:YTLREIT). It has 'hold' ratings on KLCCP Stapled Group (KL:KLCC), which comprises KLCC Property Holdings Bhd and KLCC REIT, and Al-Salam REIT (KL:ALSREIT).
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