MANILA, Philippines - Property developers are opposing plans by the government to amend the real estate investment trust (REIT) law, saying its long-term benefits far outweigh its short-term impact on tax revenues.

Ayala Land Inc., the country's top residential and commercial property developer said investments in REIT could in fact, bring in more revenues to the cash-strapped government once it is fully implemented.

"On a long term or net basis, we are looking at a significant tax take, instead of immediate revenue loss, due to the inflow of investments," said Jaime Ysmael, senior vice president of Ayala Land.

Ayala Land is in the process of selecting assets for its minimum $300-million foray into REIT, a new investment vehicle.

"As we know about any new business activity, it presents several revenue streams that can be beneficial to the tax effort in the long term, and enhance the local capital market," said Ysmael.

Former Philippine Stock Exchange (PSE) President Francis Lim said the government's plan to tweak the REIT law, may spook, and even turn away potential foreign investments into the local property sector.

"It would send the wrong message to foreign investors, if we retreat from the REIT, because they have been eagerly anticipating this for the past few months."

Finance Secretary Cesar Purisima had earlier expressed concern over the possible tax-eroding effects of the REIT law, which gives incentives to real estate firms that proceed with REIT issues.

The Finance department estimates the REIT law to result in P2.7 billion in revenue losses annually.

A bill granting tax perks to REIT firms, which will pool income-generating property assets and raise money by listing on the stock exchange, lapsed into law last December but has yet to be implemented because REIT tax rules have yet to be cleared by the Bureau of Internal Revenue.

In June, the PSE approved the listing guidelines for REITs, a month after the Securities and Exchange Commission cleared rules that will implement the REIT law.

Local real estate players said they are planning to talk with finance officials, and convince them on the positive impact of the REIT on the economy. - based on a report of Rafael Santos, ANC