Exemption from Income Tax — New Issues of Capital Stocks

July 30, 1981 BIR RULING NO. 137-81 34-g 000-00 137-81 Sycip, Gorres, Velayo & Co. P.O. Box 589, Manila 2800 Attention: Mr . J . U . Ong Tax Division Gentlemen : This refers to your letter dated April 10, 1981 requesting a ruling as to the tax consequence of the plan of ASEAN DEVELOPMENT CORPORATION (ASEAN) to invest the expected proceeds of the sale of its BA Finance Corporation's shares of stock in new issues of capital stock of Industrial Finance Corporation (IFC), a non-bank financial intermediary authorized by the Central Bank to perform quasi-banking functions. In reply, please be informed that pursuant to Section 3(b) of Revenue Regulations No. 11-80, implementing Presidential Decree No. 1738, gains arising from the disposition of property, real or personal, that corresponds to that portion of the proceeds of the sale that is invested within six (6) months from the date the gains were realized in new issues of capital stocks of banks and non-bank financial intermediaries existing as of the date of approval of the said Decree shall be exempt from income tax, if the disposition of assets upon which the gain was realized occurred in the period from September 17, 1980 up to September 16, 1985. cdtech Likewise, the gains from sale of shares of stock to the extent invested in new issues of shares of stock in banks and non-bank financial intermediaries shall be exempt from the final capital gains tax on stock transactions pursuant to Section 5 of Revenue Regulations No. 14-80, implementing Presidential Decree No. 1739. In view thereof, ASEAN shall be exempt from income tax on any gains derived from the sale of its shares in BA Finance Corporation, if it invests the entire proceeds of the sale in new issues of capital stock of IFC within six months from the date the gains were realized. Very truly yours, RUBEN B. ANCHETA Acting Commissioner