Akerlund and Rausing (Phil.) Taxable in Sweden

January 13, 1993 BIR RULING NO. 002-93 AKERLUND AND RAUSING (PHIL.) TAXABLE IN SWEDEN 24 000-00 002-93 Akerlund and Rausing (Philippines), Inc. P.O. Box 7602, DAPO, Pasay City Metro Manila Attention: Mr . Napoleon Nazareno President This refers to your letters dated February 11 and 19, 1991 stating that on October 15, 1990, Swedish Match AB, a corporation duly organized and existing under the laws of Sweden sold to AB Akerlund and Rausing, a corporation organized and existing also under the laws of Sweden, 1,402,261 shares of the capital stock of Akerlund and Rausing (Philippines), Inc. a corporation duly organized and existing under the laws of the Philippines; that the said shares of stock were acquired by Swedish Match AB through a property dividend declared by Phimco Industries, Inc. for which a withholding tax on dividends was paid by Phimco in the amount of P21,033,915.00 under Confirmation Receipt No. B19713463 dated September 5, 1990; that per report of investigation dated May 2, 1991, the real property interest of Akerlund and Rausing (Philippines), Inc. is less than 50% or .356% of its total assets; and that you are of the opinion that any gain derived by Swedish Match AB from the sale is not taxable in the Philippines under the RP-Sweden Tax Treaty. In connection therewith, you are requesting authority to transfer in the Stock and Transfer Book of Akerlund and Rausing (Philippines), Inc. the 1,402,261 shares of Swedish Match AB in the name of its new owner, AB Akerlund and Rausing. In reply thereto, I have the honor to inform you that paragraphs 3 and 4, Article 13 of the RP-Sweden Tax Treaty provides, viz: "Article 13 " GAINS FROM THE ALIENATION OF PROPERTY "1. . . . "2. . . . "3. Gains from the alienation of shares of a company, the property of which consists principally of immovable property situated in a Contracting State, may be taxed in that State. Gains from the alienation of an interest in a partnership or a trust, the property of which consists principally of immovable property situated in a Contracting State, may be taxed in that State; aisa dc "4. Gains from the alienation of any property, other than those mentioned in paragraphs 1, 2 and 3 shall be taxable only in the Contracting State of which the alienator is a resident." "5. . . . Under the aforequoted provisions, since the real property interest of Akerlund and Rausing (Philippines), Inc. is less than 50% or actually .356% of its total assets, any gain derived by Swedish Match AB from the sale of its shares of stock in Akerlund and Rausing (Philippines), Inc. to AB Akerlund and Rausing shall be subject to tax in Sweden. Such being the case, authority is hereby granted to transfer in the Stock and Transfer Book of Akerlund and Rausing (Philippines), Inc., the 1,402,261 shares of Swedish Match AB in the name of its new owner, AB Akerlund and Rausing. cdt JOSE U. ONG Commissioner of Internal Revenue