BIR Ruling No. 339-2022

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE BUREAUOF INTERNAL REVENUE Quezon City

BR Ruling No, QT-191-2022 Sec.28(B)(5)(c)& Sec.98 of the Tax Code of 1997.as amended 0T-339

NAVARROAMPIR&CO

5th Avenue corner 2.h Street Bonifacio Global Ci y 19th Floor Six/NEO 3uilding Taguig City

Atter ion: Manager. Tax and Corporate Service Glenn T. Del Rosario

Gentlemen:

This refers to ycur request ori behalf of your client. S(NOCHEM INTERNATIONAL OVERSEAS PTI.LTD.hereinafter referred to asSIPL, for confirmation of your opinion that the tran fer of shares by SIPL in SINOCHEM CROP PROTECTION (PHIL.) INC.(hereinafter re errd to asSCPIto SINOCHEM INTERNATIONAL CROP CARE OVERSEASPTILTD.hereinafter referred to asSICCPL is not subject to capital gains tax and donor s tix since the transfer is part of the corporate reorganization and also for the reason that the i en oficial ownership of SCPI's shares will remain within the Sinochem Group of Companie

BACKGROUND

56-01 Republic Pla7 t.Singapore 048619.Having its official seat in the Republic of Singapore Company Registrati on No. SIPL is a on pany incorporated and existing under the laws of Singapore with and has its registered office at 9 Raffles Place, No.

as evidenced by the roof of Residence issued on April 18,2012,SIPL is neither registered as a corporation nor asprtnership licensed to engage in business in the Philippines as confirmed by the relevant Ce tificate of Non-Registration of Corpcration/Partnership issued by the Securities and Exch nge Commissien on May 28. 2012.

partnership licensed to angage in bus iness in the Philippines. Republic Plaza. Sir gapore 048619 and is not registered reither as a corporation nor as a Registration No. SICCPL is 1 company incorporated in the Reputlic of Singapore with Company and having its place of busir ess at 9 Raffles Place. No.56-02

registered address at 22F Tower II Irsular Life Corporate entre, Insular Life Drive,Filinvest Corporate City.Alal anMuntinlupa City.is organized to ergage in any or all business relating SCPI. a cor ioration organized and existing unde"' the laws of the Philippines with

and wholesale tradit g thereof.SCPI's current Stockholder of Record as of April26.2012.as certified by its Corp orae Secretary on April 27. 2012. are is follows: and allied to chemi als pesticides. fertilizers including m anufacturing.repacking. marketing

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Name oftokholder Number of Shares Value of Shares

Li Dajun Zhang Wei Sinochem International Overseas.Pte.Ltd. I common I common conmon 1 1 PhP.

Ramil Bor ifacio Leila G.Amer Paulito B.de Pano 1 common 1 common I common 1 1 1

Total Cormon PhP

As certified by SCPI's Corporate Secretarv. SIPIowns and common shares with par value of OnPeso(Php l.00 per share of SCPI,which shares of stock make up almost one hundred percen: (100%) of the laiter's subscribed and paid-up capital stock.

SICCPL whereby the former sells.transfers. assigns, conveys and delivers to the latter any On May 17.2012. a Business Transfer Agreement was entered into by SIPL and

and all right. title ad interest in SCPI,i.e.,32,519.995 common shares with par value of Php 1.00 per share free from all liens charges, mortgages. trusts and encumbrances. In consideration theret.Sinochem Crop International(Incorporated in China shall pay a sum of US Do lars (USD1

As provide in the Corporate Organizational Suructure of Sinochem Group of Companies. the ent re title and interest of SIPL in SCPI ivill be transferred to its affiliate SICCPL as part of its corporate reorganization. In view of the foregoing structure, the sale transaction will no result in the transfer of beneficial ownership of the SCPI shares. considering that botSIPL and SICCPL are 100% owned directly or indirectly by Sinochem International Corpo iti on (Incorporated in China.

Based on the fotegoing. you now request for confirnr ation that the transfer of shares by SIPL in SCPI to SIPL is not subject to capital gains tax and donor's tax

In reply. ple: se be informed as follows:

pursuant to a corpoate reorganization of Sinochem Grou of Companies is noi subject to inconie tax/capital gains ta: The transfer of SCIIshares from SIPL to SICCPL

Section 28 (B5)(c of the National Internal Revente Code (Tax Code). as amended. provides for the taxability of gains derived by a non-residentoreign corporation from the sale. exchange or other d position of shanes of stock not traded in the stock exchange.to wit

"SE(2. Rates of Ineome Tax on Foreign Corporations. -

XXX XXX XXX

B1 Non-Residen Foreign Corporatio

SINOCHEMINTERTIONAL(OVERSEASPTE.LTD Page 3 of 5 0-339-2022

XXX XXX XXX

Stoct Eschange. (c(ptal Gains fror Sale of Shares of Stck not Traded in the

- A t.nal tax at the rate of fifteen percent (159) is herebv imposed upon thnet capital gains realized during the iaxable year from the dome sti. corporation. except shares sold, or disposedof through the Stock exhange. sale hu ter exchange or other disposition of shares of stock in a

in this case is mae pursuant to a global restructuring pian of the Sinochem Group of Companies.In BIR Ruting No.DA 088-06 dated March 6.2.006.the BIR had the occasion to SCPI shares to SICPL in exchange for Incorporated in Chinawhich owns cirectly and indirectly 1CO% of SIPL and SICCPL is not the sale.barter or ex hange being contemplated under the foregoing provision since the transfer rule that: US Dollars (USD The above-c ted provision dces not apply in the instait case. The transfer by SIPL of to be paid by Sinochem International Corporation

for i so ne tax purpose. stock tol lings effectieh consolidating beneficialand legal owne siip of the TPe shares. Since there is no transfer of bene cl ownership.no gain will be realieed by TTC and THBI Comares.is not su5;ect to capital gains tax as (1) there is no hoth Trnsferor and Transferee belong to Th Thomson Group of Com, anies and (2) the proposed transfer is a mere realignment of purst am! to aworldwice reorganization of The Thomson Group of effec.ve transfer of beneficial ownership of the TPC shares since [T]e roposed trarsfer of the TPC shares jrom TTCto THB

Holdings. This Offic ruled that the proposed transfer of Synovate shares from BVI to Holdings to capital gains tax t nd donor's tax. Synovate.BVI and oldings are all part of Synovate Far Eat Group and that in view of the corporate reorganiz tien of the Synovate Far East Group. it is envisioned that the entire Synovate shares cur ently registered under the name of BVI will be transferred from BVI to pursuant to a legitim te Asian corporate reorganization and w thout consideration is not subject Synovate. Inc.(Syn vate). a corporat on duly existing undef Philippine laws and a wholly- owned subsidiary ot SnovateAsia-Pcific-BVILimited E/I,a corporation existing under the laws of British Viigin Islands.EVI. on the other hand. is a wholly-owned company of Synovate Holdings IV(Holdings.a corporation existing tnder the laws of the Netherlands. The foregoii g pinion was reerated in BIR Ruling No.DA-406-07 which involved

beneficial ownershi ot the SCPI's shares is made since both Transferor and Transferee belong beneficial and lega o vnership of the SCPI's shares. in which. no effective transfer of business practice hi h entails a renlignment of stockholdings effectively consolidating paid by Sinochem International Corporation (Incorporated n China is made pursuant to a global restructuring plan of the Sinochem Group of Compar ies. It is considered a legitimate In the instan case, the transfer by SIPL of SCPI shares to SICCPL in exchange for US Do larsUSD1 to be

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to the Sinochem Gr ur of Companies and Sinochem International Corporation (Incorporated in Chinaalso owns 9 99% of the outstanding capital stockof SICCPL.

SICCPL. there is ng actual transfer of ownership of the sai3 share. and therefore. no gain or profit shall be recog niz d. International Corpo ati on (Incorporated in China). being the owner of the 99.99% shares of Since the lenficial ownership over the SCPI shares remain with Sinochem

accordance with Secio 1 201 of the Tax Code of 1997.as amended. domestic corporatiof are subject to DST upon execution of the deed transferring ownership or rights thereto. or upn delivery. assignment or indorsement of such shares in favor of another. No transfer of share ot stock shall be recorded unless DST thereon has been duly paid for in imposed under Sect on 175 of the Tax Code of 1997. as amended. Moreover. Section 4 of Revenue Regulatior s(RR No.13-2004 provides that all transfers of shares of stocks of a The transfer ot SCPI shares from SIPL to SICCFL. however. is subject to DST

pursuant to a corpo tate reorganization of Sinochem Group of Companies is not suhject to donor's tax. The transfer of SCFI shares from SIPL to SICCPL

imposed on the trans er by any person. resident or non-resident, of property by gift. The donor's tax applies. whether su h transfer is in trust or otherwise, whether the gift is direct or indirect. and whether the prorer is real or personal. tangible or intangible. Section 98 ol thc Tax Code of 1997. as amended. provides that a donor's tax is generally

there is no transfer (b neficial ownership of the SCPI shares. The BIR has previously ruled animus donandi. Ir this case. there is no intention to donate on the part of SIPL as the transfer was made in pursua ice to a corporate reorganization of the Sinochem Group of Companies. Moreover. the partie t the transaction are part of the Sinochem Group of Companies. hence as follows doncr.2 the increa e the patrimony of the donee,and3 the intent to do an act of liberality The essential elments of a valid donation are: (1) the reduction of the patrimony of the

can ha tributed to the transferor." witho it consideration. and primarily mcde for business consi er uions is not subject to donor's tax under Section 98 of the Tax (o because under such circunstancesno donative intent "This O-+ice has consistently ruled that the transfer of property

Also. in BIR Ruing No.DA 088-06 dated March 6.2006. the BIR held that

that a pe-son or entity' cannot donate properties the ownership of Which he ongs to themselves. transi r of properties to the member-beneficiiries. considering subsi iaries and part of The Thomson Group of Companies and there s no transfer of beneficial ownership of'ihe TPC shares . ther Ci n be no donative intent on the part of the transferor in a "Furi'rermore, both ihe Transferor and the Transferee are

BIR Ruling Nos.D-1 dated April 30.1998:DA-028-05 dated Jaruary 24.2005:and DA-136-05 dated pri7.200

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property to be donat d. Thus. the said transfer of shares. having been made pursuant to a valid corporate restructuri ng without donative intent. is not subject to donor's tax.2 held that in a direc gift, the element of donative intent niust be present in the transfer of reorganization of th Sinochem Group of Companies, hence. there is no showing of donative intent on the part o SIPL to donate the subject shares to SICCPL. It has been consistently In the instani cse. the transfer of the SCPI shares as made pursuant to a corporate

investigation it shall he disclosed that the facts are different, then this ruling shall be considered null and void. This ruling i: isued on the basis of the foregoing facts as represented. However. if upon

Very truly yours.

K-1 Commissioner of Internal Revenue CAESAR R. DULAY 052191 Q

Perezs.Commissioneo1 internal Revenue.TA Case No.1707.Febrtary 10.1969