BIR Ruling No. 140-83

August 2, 1983 BIR RULING NO. 140-83 Gentlemen : This refers to your letter dated January 17, 1983 requesting confirmation that the gains realized by ACI Australia Limited, (formerly Australia Consolidated Industries Limited) from the sale of its shares in ACI Fiberglass (Philippines), Inc. to ACI Asia Limited are exempt from the capital gains tax. It is represented that ACI Australia Limited is a corporation organized and existing under the laws of the State of Victoria, Australia, and is not doing business in the Philippines. In reply thereto, please be informed that said gains are exempt from the capital gains tax imposed by Section 34(g) of the RP-Australia Tax Treaty which provides: "(3) Subject to the provisions of paragraph (1), income from the alienation of capital assets of an enterprise of one of the Contracting States or available to a resident of one of the Contracting States for the purpose of performing professional services or other independent activities shall be taxable only in that Contracting State, but where those assets form part of the business property of a permanent establishment or fixed base situated in the other Contracting State, such income may be taxed in that other State." Under the foregoing provisions of the Tax Treaty, the gain derived from the sale of capital assets of an Australian enterprise, i.e., the shares of stocks of ACI Australia in ACI Fiberglass (Philippines) are taxable only in Australia. cdtech Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner Bureau of Internal Revenue