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Gentlemen :
This refers to your letter dated October 24, 2002, requesting confirmation of
your opinion to the effect that any gain derived from the sale by DataOne (Asia) Pte.
Ltd. (D1 Singapore) of its shares of stock in DataOne (Asia) Philippines, Inc. (D1
Philippines) to Finacor Finance Corporation (Finacor) is not subject to capital gains
tax pursuant to the RP-Singapore tax treaty.
and that the real properties in the amount of P2,786,050 as against its total assets of
P21,505,871 represent 12% of the total assets of D1 Philippines which is less than
50% of the carrying value of its total assets. EcSaHA
"Article 13
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 2
GAINS FROM THE ALIENATION OF PROPERTY
The gains realized by D1 Singapore from the sale of its shares of stock in D1
Philippines to Finacor are generally taxable in Singapore. However, under paragraph
3 of the aforequoted provision, the Philippines may tax the gains to be derived from
the disposition of interest in a corporation if its entire assets consist principally of real
property interest located in the Philippines. "Real Property Interest" means interest on
properties enumerated in Section 3 of Revenue Regulations No. 4-86, which are not,
however, exclusive of others that are similarly situated. As used in the treaties and in
the Regulations, it shall be understood to include real properties as understood under
Philippine Laws. Moreover, "principally" means more than 50% of the entire assets in
terms of value. (Sec. 2(a) and (b), Revenue, Regulations No. 4-86)
This ruling is issued on the basis of the facts as represented. However, if upon
investigation it shall be disclosed that the facts are different, then this ruling shall be
without force and effect insofar as herein parties are concerned.
By:
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 5