ALI and RLC have the highest income tax rates among the top property developers in country with 26.5 percent and 25 percent respectively.
The two property giants sell mostly premium to luxury units compared to their mass market-oriented rivals.
The Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act lowers the corporate income tax rate from 30 percent to 25 percent to be implemented retroactively to July 2020.
COL Financial said property companies could have benefited more from CREATE if Duterte did not veto the provision raising the value added tax exemption on low cost properties – from P2 million to P4.2 million for house and lot packages and to P2 million for lots.
“Raising the VAT threshold would have helped boost demand for residential properties as it would have increased the affordability of residential projects priced between P2 million and P4.2 million,” COL said.
“While we do not expect the effective income tax rate to be reduced by a full five percentage points as listed property companies’ current effective tax rates are mostly already below 30 percent, we still expect a meaningful reduction in tax expense due to the passage of the CREATE Act,” it added.