BIR Ruling No. 111-83

June 23, 1983 BIR RULING NO. 111-83 Gentlemen : This refers to your letter dated February 8, 1983 requesting confirmation of your opinion to the effect that partnerships are not subject to the 10% corporate development tax under Section 24(e) of the Tax Code. In reply thereto, I have the honor to inform you that in addition to the ordinary corporate income tax imposed in paragraph (a) of Section 24 of the Tax Code, a domestic or resident foreign corporation shall be liable to pay a corporate development tax equivalent to 10% of its taxable net income if it qualifies as a closely-held corporation as defined in Section 24(e) of the Tax Code. The term "closely-held corporation" means stock any corporation (a) at least 50% in value of the outstanding stock or (b) at least 50% of the total combined voting power of all classes of stock entitled to vote, at anytime during the taxable year, is owned directly or indirectly by or for not more than five persons, natural or juridical. The stock ownership test of determining whether a corporation is a closely-held corporation applies only to corporations and not to partnerships no matter how created or organized. (Rev. Regs. No. 7-81 amending Rev. Regs. No. 11-77) cdtech In view thereof, this Office is of the opinion as it hereby holds that since partnerships have no shares of stock to reckon with for purposes of the aforesaid stock ownership test, they are not covered by the 10% corporate development tax imposed under Section 24(e) of the Tax Code. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner Bureau of Internal Revenue