SGV & Co.

December 16, 2008 BIR RULING [DA-(C-172) 532-08] 27; 175; DA-088-06; DA-209-05 SGV & Co. 6760 Ayala Avenue Makati City Attention: Atty. R.C. Vinzon Tax Services Gentlemen : This refers to your letter dated December 5, 2008 stating that your client, Amkor Technology Philippines, Inc. (ATP), is a domestic corporation duly organized and existing under and by virtue of the laws of the Philippines with principal office address at Km. 22 East Service Road, South Superhighway, Cupang, Muntinlupa City; that it is primarily involved in the assembly and test of semiconductor devices; that Amkor Technology, Inc. (ATI-U.S.) is a nonresident foreign corporation duly organized and existing under the laws of the State of Delaware in the United States of America; that ATP is 60%-owned by Guardian Assets, Inc. (GAI-U.S.) and 40%-owned by Amkor Technology Ltd. (ATL-Cayman); that based on a worldwide corporate structure, the following are the structures of ownerships among Amkor Group of Companies: a. GAI-U.S. is 100%-owned by ATI-U.S.; b. ATL-Cayman is 100%-owned by GAI-U.S.; c. Amkor Technology Singapore Holdings, Inc. (ATSHI-Singapore) is 100%-owned by ATL-Cayman; and d. Amkor Technology Singapore Philippines Holding Pte. Ltd. (ATSPH-Singapore) is 100%-owned by ATSHI-Singapore; that ATI-U.S., GAI-U.S., ATL-Cayman, ATSHI-Singapore, ATSPH-Singapore and ATP all belong to the Amkor Group of Companies; that GAI-U.S. shall transfer 52,382,313 shares which constitute 60% of the total outstanding capital stock in ATP with a par value of P1.00 per share to ATL-Cayman; that ATL-Cayman shall transfer 87,303,854 which constitute 100% of the total outstanding capital stock in ATP with a par value of P1.00 per share to ATSHI-Singapore; and that ATSHI-Singapore in turn shall transfer the 87,303,854 which constitute 100% of the total outstanding capital stock in ATP with a par value of P1.00 per share to ATSPH-Singapore, the ultimate transferee. Based on the foregoing representations, you now request for a ruling confirming your opinion that the proposed transfers of shares in ATP ("ATP shares") from Guardian Assets, Inc. (GAI-U.S.) to Amkor Technology Ltd. (ATL-Cayman), then from ATL-Cayman to Amkor Technology Singapore Holdings, Inc. (ATSHI-Singapore) and finally from ATSHI-Singapore to Amkor Technology Singapore Philippines Holding Pte. Ltd. (ATSPH-Singapore) are not subject to capital gains tax since the transfers are part of a worldwide corporate reorganization and also because the beneficial ownership of the ATP shares will remain within the Amkor Group of Companies, the transferors and the transferees being all subsidiaries of Amkor Technology, Inc. (ATI-U.S.), their ultimate parent. SDHTEC In reply thereto, please be informed as follows: 1. The proposed transfers of shares in ATP from GAI-U.S. to ATL-Cayman, from ATL-Cayman to ATSHI-Singapore and from ATSHI-Singapore to ATSPH-Singapore pursuant to a legitimate worldwide corporate reorganization are not subject to capital gains tax. In numerous rulings issued by this Office, we ruled that the transfer of shares of stock in a Philippine company by a nonresident foreign corporation to another nonresident foreign corporation belonging to the same group of companies, pursuant to a legitimate worldwide corporate reorganization, is exempt from capital gains tax since there is no effective transfer of beneficial ownership of the shares in the Philippine company. There being no transfer of beneficial ownership, no gain will be realized by both the transferor and the transferee from the transfer of the shares (BIR Ruling Nos. DA-209-05 dated April 27, 2005; DA-642-04 dated December 17, 2004; DA-500-03 dated December 11, 2003; DA-144-03 dated May 5, 2003; DA-130-03 dated April 25, 2003; 347-87 dated November 5, 1987; BIR Ruling No. 161-83 dated September 14, 1983). Based on the foregoing, the proposed transfers of the ATP shares from GAI-U.S. to ATL-Cayman, from ATL-Cayman to ATSHI-Singapore and from ATSHI-Singapore to ATSPH-Singapore, pursuant to a worldwide corporate reorganization of the Amkor Group of Companies, are not subject to capital gains tax as (1) there is no effective transfer of beneficial ownership of the ATP shares since the transferors and transferees belong to the Amkor Group of Companies and (2) the proposed transfer is a mere realignment of stockholdings effectively consolidating beneficial and legal ownership of the ATP shares. Since there is no transfer of beneficial ownership, no gain will be realized by GAI-U.S., ATL-Cayman and ATSHI-Singapore for income tax purposes (BIR Ruling No. DA-088-06 dated March 6, 2006). 2. The proposed transfers by GAI-U.S., ATL-Cayman and ATSHI-Singapore of their ATP shares are subject to DST. The proposed transfers by GAI-U.S., ATL-Cayman and ATSHI-Singapore of their ATP shares are subject to DST. Under Section 4 of Revenue Regulations No. 13-2004, implementing Section 175 of the Tax Code of 1997, as amended, all transfer of shares of stocks of a domestic corporation are subject to the DST upon execution of the deed transferring ownership or rights thereto, or upon delivery, assignment or indorsement of such shares in favor of another. No transfer of shares of stock shall be recorded unless DST thereon has been duly paid for in accordance with Section 201 of the same Tax Code (BIR Ruling No. DA-209-2005 dated April 27, 2005, BIR Ruling No. 475-05 dated November 21, 2005 and BIR Ruling No. DA-088-06 dated March 6, 2006). This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. aITDAE Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service