Taxable Base for 2% Common Carrier's Tax and 2 1/2% Income Tax

April 27, 1979 BIR RULING NO. 024-79 Taxable base for 2% common carrier's tax and 2% income tax This refers to your letter dated December 19, 1978 informing this Office that your client, the Chase Manhattan Bank, N.A., hereinafter referred to as Chase, a U.S. corporation with principal office at 1 Chase Manhattan Plaza, New York, U.S.A., and with an offshore banking unit in the Philippines with office at 14th Floor, Pacific Bank Buildings, Ayala Avenue, Makati, Metro Manila, proposes to enter into the following transaction: "Chase presently owns beneficially and of record 335,963 share of Class B Common Stock (the 'Shares') of the Commercial Bank and Trust Company, a commercial banking corporation organized and existing under the laws of the Republic of the Philippines. "Chase proposes to sell, transfer and convey the Shares at a fixed price to certain buyers (who are existing share-holders of the Commercial Bank and Trust Company, the 'Buyers'). "The Shares were all acquired by and issued to Chase after November 5, 1970. casia "The agreement of conveyance of the Shares will be signed and executed in the Philippines between Chase and the Buyers. The purchase price for the Shares will be remitted to Chase head office at the appropriate time in accordance with the pertinent rules and regulations of the Central Bank of the Philippines." In reply, I have the honor to confirm your opinion that your client is subject to the of 1% stock transaction tax imposed by Section 210(a) of the Tax Code of 1977 on the sale of its shares of stocks. Likewise, the buyers of the shares of stocks are subject to the documentary stamp tax imposed by Section 225 of the Tax Code of 1977, since they have assumed payment thereof. Moreover, in the event that the offshore banking unit (OBU) remits to its head office the purchase price of the shares, said OBU shall be subject to the 15% remittance tax based on the Profits derived from the sale of the shares, in accordance with Section 24(b)(2) of the Tax Code of 1977. Said profit may be arrived at by excluding from the purchase price, the original cost of the shares and expenses incurred in the sale thereof.