BIR Ruling [DA-201-96]

June 18, 1996 BIR RULING [DA-201-96] SGV & Co. 6760 Ayala Avenue Makati City Attention: Atty . F . G . Tagao Tax Division Gentlemen : This refers to your letter dated December 23, 1994 stating that pursuant to the reorganization of Smithkline Beecham Corporation of the U.S. and Smithkline Beecham PLC of U.K., the Philippine branch of Smith Kline & French Overseas Co. (SK&F OVCO) was withdrawn and its assets and liabilities were transferred to the Philippine branch of the U.K. subsidiary, Smithkline Beecham Limited (SBRL); that when SBRL was established to take over the business activities of SK&F OVCO, the employees of the latter were absorbed by the former as if no change was effected; that there was in truth and in fact a mere change of name from what used to be SK&F OVCO to what is now SBRL; that the employees remained the same and they continue to receive the same benefits under SBRL as in SK&F OVCO; that among the benefits the employees continue to receive are those they expect to receive under the Retirement Plan for Philippine Branch Employees of Smithkline Beecham Research Limited (the Plan formerly Smith Kline & French Overseas Company) as if there was no interruption of their employment; and that they continue to be covered in the event of retirement, disability, separation from service, or death; and that the change of name of the Plan took effect on July 1, 1993, please be informed that since the amendment (the Plan's change of name) is not prejudicial to the employee-member, it will not affect the Plan's qualification under Republic Act No. 4917 [now Section 28(b)(7)(A) of the Tax Code as amplified by Revenue Regulations No. 1-68 as amended by Revenue Regulations No. 1-83] and therefore, the fund created to implement the provisions of the plan and the retirement pay to qualified retirees remain exempt pursuant to said law. Moreover, the Retirement Plan for Philippine Branch Employees of Smithkline Beecham Research Limited (formerly Smith Kline & French Overseas Company) is no longer subject to the 20% final tax on interest and/or yield on deposit substitute instruments and on interest on its Philippine currency bank deposits. (CIR vs. GCL Retirement Plan, GR. No. 95022 dated March 23, 1992). Finally, it is requested that a copy of this latest amendatory letter of exemption be attached to the annual information return which the trustee of the Retirement Plan for Philippine Branch Employees of Smithkline Beecham Research Limited will file on or before April 15 of each year pursuant to Revenue Regulations No. 1-83 amending Revenue Regulations No. 1-68 and implementing Section 28(b)(7)(A) of the Tax Code, as amended. cdta Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service) By: ALICIA L. TOMACRUZ Head Revenue Executive Assistant (Legal Service)