Tax Consequences of Transfer of Shares of Stock in Evenflo (Phil.), Inc. by Evenflo Juvenile Products Co. to Evenflo Int'l., Inc.

May 16, 1985 BIR RULING NO. 071-85 24 134-83 071-85 Gentlemen : This refers to your letter dated October 18, 1984 requesting a ruling on the tax consequences of the transfer of shares of stock in Evenflo (Philippines), Inc. (EPI) by Evenflo Juvenile Products Company (EJPC) to Evenflo International, Inc. (EII). It is represented that EPI is a domestic corporation which is wholly owned subsidiary of EJPC; that as of June 5, 1984, EJPC has a subscribed capital stock of P3,999,500 of the P4,000.00 stocks of EPI; that EJPC is a US corporation incorporated under the laws of Delaware; that EII is likewise a US corporation and another wholly owned subsidiary of EJPC; and that both EJPC and EII are not engaged in trade or business in the Philippines. In reply, please be informed that the transfer of shares of stock in a wholly owned subsidiary by a mother company to another of its wholly owned subsidiary is not a taxable event in this jurisdiction. For this reason, the determination of whether the Philippines has the primary right to tax the income realized, if any, from such transaction, under the provisions of the RP-US Tax Treaty, was deemed not necessary. cdtech Wherefore, the secretary of Evenflo (Philippines) may cause the registration of the transfer of the shares of stock from Evenflo Juvenile Products Company to Evenflo International, Inc., without need of proof of payment of capital gains tax by the transferor. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner