Closely-Held Corporation for Purposes of the 10% Corporate Development Tax

October 13, 1981 BIR RULING NO. 196-81 24-e 055-81 196-81 Messrs. Castillo, Laman, Tan & Pantaleon Law Offices Salcedo Centre, 136 H.V. de la Costa St. Salcedo Village Makati, Metro Manila Attention: Messrs . Leonides F . Balmeo & Remie A . Noval Gentlemen : In reply to your letter dated June 25, 1981, please be informed that your client, General Electric Philippines, Inc., (GEP) is not a closely-held corporation for purposes of the 10% corporate development tax imposed by Section 24(e) of the Tax Code, as amended by Presidential Decree No. 1773, it appearing that it is wholly-owned by General Electric (U.S.) (GEUS), which is a U.S. corporation, with 529, 453 stockholders. A closely-held corporation, for purposes of the 10% corporate development tax, is a corporation at least 50% of the total combined voting power of all classes of stock entitled to vote, at any time during the taxable year, is owned directly or indirectly by or not more than five (5) persons, natural or juridical. This definition does not apply in the case of your client, because it is not considered owned by the single parent corporation but by the 529, 453 stockholders of said parent corporation. (Sec. 2(c) Revenue Regulations No. 7-81, implementing Section 24(e), Tax Code, as amended by Presidential Decree No. 1773). cdta Very truly yours, ROMULO M. VILLA Acting Commissioner