Stock Transaction Tax - Remittance of Profit Abroad

April 18, 1979 BIR RULING NO. 016-79 Stock transaction tax remittance of profit abroad This refers to the letters of the Central Bank of the Philippines dated August 24 and October 24, 1978 and to your letter dated November 10, 1978 requesting confirmation of your opinion to the effect that the sale by the Head Office of your client, Marubeni Corporation (Philippine Branch) of the 965,249 Meralco shares to Meralco Securities Corporation (now First Philippine Holdings Corporation) for P11,196,888.40 is subject only to the of 1% stock transaction tax prescribed by Section 210(a) of the Internal Revenue Code of 1977 and that the profit which will be remitted by your client to its Head Office in Japan shall be subject to the 15% branch profit remittance tax. It appears that the Head Office of your client purchased in 1971 965,249 preferred, convertible, cumulative shares of stock of the Manila Electric Co. at a total cost of US $1,435,893.95 or P9,652,490 in accordance with the Stock Purchase Agreement entered into by and between Meralco Securities Corporation and Marubeni Corporation dated November 24, 1971; that the said 965,249 Meralco preferred shares of stock were repurchased by Meralco Securities Corporation on October 2, 1978 at a total purchase price of P11,196,888.40. In reply thereto, I have the honor to inform you that since the 965,249 Meralco preferred shares were acquired by Marubeni Corporation in 1971 or after November 5, 1970, the sale of such shares for P11,196,888.40 to Meralco Securities Corporation is subject only to the of 1% stock transaction tax pursuant to Section 210(a) of the Internal Revenue Code of 1977. Likewise, the profit which will be remitted by your client to its Head office in Japan is subject to the 15% branch profit remittance tax pursuant to Section 24(b) (2) of the Tax Code of 1977. In the instant case, the 15% branch profit remittance tax should be based on the amount of P1,504,330.43 representing profit derived from the disposition of the shares, 15% of which is P225,649.57.