BIR Ruling No. 156-82

April 28, 1982 BIR RULING NO. 156-82 034-g 102-81 156-82 Sycip, Salazar, Feliciano & Hernandez Law Offices PAIC Building, 105 Paseo de Roxas Makati, Metro Manila Gentlemen : This refers to your letter dated February 5, 1982 requesting a ruling as to whether the gains derived by your client, Samuel Montagu & Co., Ltd., from the sale of its PDCP shares of stock are exempt from the capital gains tax. It is represented that your client is a corporation organized under the laws of England and not doing business in the Philippines; that the said PDCP shares of stock are registered in the name of your client or its nominee, CA Pile Nominees, Ltd., a subsidiary of HongKong and Shanghai Banking Corporation. In reply, please be informed as follows: 1. Residents of the United Kingdom and Ireland are not subject to the capital gains tax imposed by Sec. 34(g) of the Tax Code, as amended by PD 1739 on gains derived from the sale of shares of stock of local corporation owned by said residents in accordance with Sec. 4, Art. 12 of the RP-UK Tax Treaty, which provides as follows: "4) Capital gains from the alienation of any property other than those mentioned in paragraphs (1), (2) and (3) of this Article shall be taxable only in the Contracting State of which the alienator is a resident." In other words, said gains are subject to tax only in the United Kingdom. 2. The nominee shall be required to file the return but shall not be liable to pay the capital gains tax, if any, since the beneficial owners of the shares of stock are residents of the United Kingdom and Ireland and, therefore, subject to tax only in said countries. 3. The shares of stock owned by the residents of the United Kingdom and Ireland can be transferred in the books of the domestic corporation in the name of the buyer upon certification by this Office that the gains derived from the sale of said shares of stock are exempt from the capital gains tax imposed under Section 34(g) of the Tax Code as amended by Presidential Decree No. 1739. cdti Very truly yours, RUBEN B. ANCHETA Acting Commissioner