Manulife US REIT and Keppel-KBS US REIT say DPU not hit by proposed changes to US tax rules as of now

SINGAPORE (Dec 27): The managers of Manulife US REIT (MUST) and Keppel-KBS US REIT (KORE) on Thursday said proposed changes to tax rules in the United States -- together with recent changes to the tax regime in Barbados -- are not expected to have any material impact on the consolidated net tangible assets or distributions per unit (DPUs) of their REITs while no further changes can be expected to the REIT’s holding structure so far.

However, Manulife US Real Estate Management and Keppel-KBS US REIT Management cautioned that the proposed changes to US tax regulations 267A have yet been finalised and the final version -- effective from Jan 1 -- could differ materially from the current form and could result in additional costs. The United States Department of the Treasury had stated that it expects final regulations under Section 267A to be announced by June 22, 2019.

To recap, the United States Department of the Treasury on Dec 20 released proposed regulations under Section 267A. Separately, on Nov 20, the government of Barbados announced the country will converge its local and international tax rates. It was proposed that from Jan 1, 2019, domestic companies will pay the same tax rates as international companies, on a sliding scale of 5.5%, reducing to 1.0% as taxable income increases.