Tax Consequence of Sale to Be Consummated Outside the Phil. Involving Shares of Stocks in a Foreign Corporation

April 1, 1986 BIR RULING NO. 030-86 24 (a) 000-00 030-86 Gentlemen : This refers to your letter dated February 18, 1986 requesting an opinion on the tax consequence of a sale to be consummated outside of the Philippines by your client, International Pipe Industries Corporation (IPIC), involving its shares of stocks in a foreign corporation organized under the laws of Indonesia. It is represented that IPIC is a domestic corporation engaged in the manufacture of welded steel pipes; that it owns shares of stocks of an Indonesian corporation which it intends to sell to an Indonesian national, and that the sale will be perfected in Indonesia. In reply, please be informed that your client is subject to the ordinary corporate income tax on the gain to be derived from the sale of the above shares of stocks. It may be stated that as a domestic corporation, it is subject to income tax on income derived from all sources, i.e. within and without the Philippines, pursuant to Section 24(a) of the Tax Code. The schedular tax on net capital gains realized from the sale of shares of stocks prescribed by Section 34(g) of the Tax Code does not apply because this provision of law covers only the sale or exchange of shares of stocks in a domestic corporation. cdtech Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner