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Tuesday, 12 July 2011 10:20

Mexican legislators amended the Mexican Income Tax Law (MITL) to allow Real Estate Investment Trusts in Mexico under the term FIBRA (Spanish acronym -- Fideicomisos de Infraestructura y Bienes Races) in 2003, but implementation was delayed because of the tax consequences. Mexican FIBRAs must be incorporated as real property trusts. They must have a trustee that is a financial institution domiciled in Mexico and authorized to act as trustee. Trusts are governed by the Mexican Law of Negotiable Instruments and Credit Operations. Unsurprisingly, Mexican FIBRAs are similar to US REITs but there are differences, including that there is no minimum number of shareholders, and no restriction on how many shares any given individual can own. The Fibra's assets must consist of at least 70% real estate or related to real estate. The other 30% must be invested in Federal Government Securities registered in the National Securities Registry or in bond or money market mutual funds. FIBRAs must distribute at least 95% of taxable income to shareholders no later than March 15 of the following year. REITs in Mexico must hold their property for at least 4 years after date of construction completion or their acquisition. FIBRAs can also be private offerings, as well as publicly listed and traded. Publicly listed FIBRAs must have at least 20% of shares owned by the general public and traded on the secondary market. In 2010 the Finance Ministry helped clear the legal obstacles.

Last Updated on Monday, 15 April 2013 07:40