Application for Relief from Double Taxation Relative to Remittances of Dividends to Musashi Kogyo Co., Ltd (Musashi) Who Appears to Own 533,250 Shares of that Company with a Par value of P1.00 Per Share

February 14, 1995 BIR RULING NO. 025-95 50 (a) 000-00 025-95 Labtech Manufacturing Industries, Inc. No. 6, 21st Avenue Cubao, Quezon City Attention: Mr . Gregorio L . Viado Finance Manager Gentlemen : This refers to your application for relief from double taxation relative to your remittances of dividends to Musashi Kogyo Co., Ltd (Musashi), 18-20 Inaricho, Hanno-Shi, Saltama, Japan, who appears to own 533,250 shares of that company with a par value of P1.00 per share. It appears from the certification of your Corporate Secretary dated June 24, 1992 that Musashi holds 5.69% of your total subscribed shares of stock. In reply, please be informed that pursuant to Article 10(2)(a) and (b) of the RP-Japan Tax Treaty, Stating: "(2) However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the laws of that Contracting State, but if the recipient is the beneficial owner of the dividends the tax so charged shall not exceed: "(a) 10 percent of the gross amount of the dividends if the beneficial owner is a company which holds directly at least 25 percent either of the voting shares of the company the dividends or of the total shares issued by that company during the period of six months immediately preceding the date of payment of the dividends. "(b) 25 percent of the gross amount of the dividends in all other cases. xxx xxx xxx the conditions for the application of 10% preferential income tax rate on dividend remittance, are: (1) that the recipient of the dividends is the beneficial owner thereof; and (2) that the beneficial owner is a company which holds directly at least 25% either of the voting shares of the domestic company (Labtech) paying the dividends or of the total shares issued by the company during the period of six (6) months immediately preceding the date of payment of the dividends. Conversely, if the recipient company does not hold at least 25% of the voting shares of the dividend payor, or of its total shares issued during the period of six months immediately preceding the date of payment of the dividends, the dividend remittance shall be subject to the 25% final withholding tax. Accordingly, since Musashi holds only 5.69% of your total subscribed shares of stock, your dividend remittance to the latter shall be subject to the 25% final withholding tax. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue