In order to support the pilot projects of real estate investment trusts (REITs) in the infrastructure sector, the Ministry of Finance and the State Administration of Taxation jointly issued on January 29, 2022 the "Regulations on the Pilot Taxation of Real Estate Investment Trusts (REITs) in the Infrastructure Sector". Policy Announcement" (hereinafter referred to as "Announcement No. 3"), for infrastructure REITs, it can be said that the tax policy has ushered in a major benefit.

Announcement No. 3 effectively reduces the corporate income tax burden of infrastructure REITs during the restructuring and establishment stages, and reduces the uncertainty of costs during the implementation stage.

Announcement No. 3 clarifies the corporate income tax treatment methods for restructuring and establishment, but relevant matters need to be further confirmed. In light of the difficulties that may be encountered in actual operation, the following views are put forward for further discussion on some unspecified matters.

The situation that has enjoyed the relevant policies of Announcement 3 but has not been successfully raised and issued remains to be further clarified. If the asset reorganization is completed, but the infrastructure REITs are not successfully issued, it is yet to be confirmed whether additional taxes and fees need to be paid. positive reporting.

The range of original stakeholders who enjoy the deferral policy is to be confirmed. In the practice of the first batch of REITs, in addition to the strategic placement by the original owner, the original owner or its related parties under the same control will also purchase shares of REITs. In this case, whether the original owner can enjoy preferential policies and related The stake ratio requirement for the relationship is to be confirmed.

In order to accurately apply the deferral policy, it is necessary to consider the original owner as the subscription subject of the strategic allotment shares, and the restrictions on the issuance plan have been increased. Therefore, it is recommended to further clarify the scope of the original shareholders who enjoy the deferred policy, and at the same time consider the "original shareholders or their affiliates under the same control" who participate in the strategic placement stipulated in the Guidelines for Public Offering of Infrastructure Securities Investment Funds (Trial) "Party" to strengthen the support effect of Announcement 3 on infrastructure REITs.

In addition, in practice, the reorganization plan will involve complex situations such as multi-layer companies and multiple holders. After multiple reorganizations in the previous sequence, the relevant entities involved in the reorganization may not be fully applicable to Announcement 3. It is suggested that the multi-step restructuring process involved in the establishment of REITs can enjoy deferred tax payment in accordance with Announcement No. 3, so that the policy can benefit the relevant entities in the restructuring plan that participate in asset restructuring and REITs together with the original owners, and effectively reduce the income tax burden in such cases. .

The transfer scope needs to be further defined. Announcement No. 3 adopts the form of transfer for asset restructuring, which can be understood in a narrow sense as “between resident enterprises that are 100% directly controlled, and between resident enterprises that are 100% directly controlled by the same or the same resident enterprises, based on net book value. transfer of equity or assets”. Judging from the first batch of 11 REITs projects, there are other ways of reorganization, such as enterprise division and new asset investment, and whether other forms other than transfer in the narrow sense are applicable still needs to be confirmed. At the same time, considering the impact on other taxes such as land value-added tax and deed tax, it is recommended to understand the transfer in a broad sense, that is, to cover forms such as business division, which will help improve the flexibility of the restructuring plan and reduce the comprehensive tax burden of the original owner. .

Announcement No. 3 does not stipulate the proportional limit of the "non-equity payment amount", which is helpful to eliminate the potential obstacle that the overall arrangement may not be able to apply the "special tax treatment". Announcement No. 3 does not stipulate the proportional limit of the "non-equity payment amount", which helps to eliminate the possibility that some tax authorities under the original system believe that the "consequentially transferred debt" is the "non-equity payment amount", which makes the overall arrangement inapplicable The potential possibility of "special tax treatment" also makes it easier to cooperate with other taxes such as value-added tax to obtain the optimal combination of relevant tax incentives.

Combined with the characteristics of the full cycle of publicly offered REITs, the system of preferential tax policies will be gradually improved. After the REITs product expires, if it is repurchased by the original owner, the project company may need to pay corporate income tax, value-added tax, deed tax, land value-added tax, etc. again. Therefore, it is recommended to restructure infrastructure REITs from asset stripping, public offering, etc. The establishment of REITs until the withdrawal of assets is an overall restructuring process, which is regarded as a step-by-step implementation but is actually a package plan, and systematic tax incentives are given.

Announcement No. 3 provides strong support for the development of infrastructure REITs. It is believed that in the future, with the further improvement of my country's infrastructure REITs tax policy, it will boost the vigorous development of the infrastructure REITs market.

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