BIR Ruling No. 408-2020

BUREAU OF INTERNAL REVENUE REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE

Quezon City

OT0408-2020 Sec.28B5b,Tax Code BIR Ruling No.188-16

JUL 2 4 2020

CESAR C.CRUZ & PARTNERS LAW OFFICES 3001 Ayala Life-FGU Center

Makati City, 1227 Metro Manila 6811 Ayala Avenue

Attention: Atty. Cesar C. Cruz

Gentlemen:

This refers to your letter dated September 21, 2015 requesting on behalf of your client. TSUKIDEN GLOBAL CORPORATE SERVICES,INC. (TGCSI) for confirmation of

your opinion that the dividends paid by TGCSI to Tsukiden HongKong Ltd. (TKH), are

subject to the fifteen percent (15%) final withholding tax under Section 28 (B)(5)(b) of the

National Internal-Revenue Code of 1997, as amended (Tax Code).

As represented, TGCSI (formerly: LEI Global Corporate Services, Inc.) is a resident

corporation registered with the Securities and Exchange Commission (SEC) with SEC

Registration No. and with principal office at 124 North Science Avenue,

SEPZ, Laguna Technopark, Binan, Laguna.

TGCSI is a corporation which is 36.00% owned by TKH, a Hong Kong based company

with business address at Flat Rm. 2, 5/F Sai Wan Ho Plaza, 68 Shau Kei Wan Road, Hong

Kong. TKH is'not registered as a corporation or as a partnership in the Philippines.

On August 20, 2015, the Corporation's Board of Directors unanimously approved a

Resolution declaring a cash dividend of (PhP ) or

per share on the common stock of the corporation payable on October

30, 2015, to stockholders of record at the close of business on March 31, 2015 out of the

retained earnings of the Corporation. By virtue of said resolution, cash dividends were to be

1 See original copy of the SEC issued Certification of Non-Registration of Company dated September 16, 2015

OT-0408-2020 JUL 2 4 2020

Cesar C. Cruz & Partners (Tsukiden Global Corporate Services, Inc.)

Page 2 of 4

paid to the following stockholders:2

Amount of

Name of Stockholder Shareholdings Pereent Dividend Cash

(PhP)

Tsukiden HongKong Ltd

Tsukiden Electronics

Philippines Inc. Retirement Fund Edgardo B.Etac

Eric Pacual

Luzviminda Arcenas Junichi Ito Kazuma Hanzawa

Irene L. Campit

Senen M. Sarmiento Toyojiro Nagai

TOTAL

Under current tax laws and reguiations of Hong Kong, dividends to be received by a

resident of Hong Kong, such as THK, from Philippine companies as foreign source income,

are not subject to Hong Kong Profits Tax, and the Inland Revenue Department of the

Government of Hong Kong Special Administrative Region treats all dividends received by

residents of Hong Kong from foreign sources as non-taxable under Hong Kong Laws.3

In reply, please be informed that Section 28 (B)(5)(b) provides as follows:

"SEC. 28. Rates of Income Tax on Foreign Corporations. -

X X X x x x X X x

(B) Tax on Nonresident Foreign Corporation. -

xxxxxxxxx

Da

2 See Secretary's Certificate dated August 28, 2015.

3 Paragraph 1.2, Hong Kong's schedular income tax system only levies taxes via profits tax, property tax and

salaries tax on profits/income sourced in Hong Kong. As dividend income is not included in one of these

schedules, dividends received by shareholders are not chargeable to tax. See Section 26(a) of Inland Revenue

Ordinance (Cap.112).

OT-0408-2020 JUL 2 4 2020

Cesar C.Cruz & Partners (T'sukiden Glocai Corncrate Services.Inc.) Page 3 of 4

(5) Tax on Certain Incomes Received by a Nonresident Foreign Corporation.

xXXXXXXXX

(b)Intercorporate Dividends. -- A final withholding tax at the rate in the Philippines equivalent to twenty percent (20%), which dividends as provided in this subparagraph: Provided, That effective January 1, 2009, the credit against the tax due shall be equivalent to fifteen percent (15%), which represents the (30%) and the fifteen percent (15%) tax on dividends, (Emphasis provided) domiciled, shall allow a credit against the tax due from the represents the difference hetween the reguiar income tax of thirty-five percent (35%) and the fifteen percent (15%) tax on difference between the regular income tax of thirty percent country in which the nonresident foreign corporation is nonresident foreign corporation taxes deemed to have been paid of fifteen percent (1.5%) is hereby imposed on the amount of cash and/or property dividends received from a domestic Section 57 (A) of this Code, subiect to the condition that the corporation, which shall be collected and paid as provided in

corporation taxes deemed to have been paid in the Philippines equivalent to fifteen percent amount of the dividends is applicable where the country in which the recipient foreign corporation is domiciled allows a credit against the tax due from the recipient foreign (15%). From the above provision of the Tax Code. a tax rate of fifteen percent (15%) on the

Philippines, Inc., G.R. No. L-68375 dated April 15, 1988, where the Supreme Court ruled that: This was clarified in the case of Commissioner of Internal Revenue vs. Wander

imposed under the abovementioned section is satisfied. Accordingly, the withholding tax rate of 15% is hereby affirmed." dividends to be received by the said corporation in the Philippines, the condition - since the Swiss Government does not impose any tax on the

corporation to a company incorporated under the laws of Hong Kong, dividends remitted to THK, a nonresident foreign corporation domiciled in Hong Kong are subject only to the 15% withholding tax. In applying the aforesaid section to a case involving dividends paid by a domestic

to its dividend declaration on August 20, 2015, to Tsukiden HongKong Ltd. payable on dividends in US Dollars to be paid by Tsukiden Global Corporate Services, Inc., pursuant In view of the foregoing, this Office hereby confirms your opinion that the cash

COT-0408-2020 JUL 2 4 2020

Cesar C. Cruz & Partners (Tsukiden Global Corporate Services, Inc.) Page 4 of 4

October 30, 2015, are subject to 15% final withholding tax under Section 28(B)(5)(b) of the Tax Code.

if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered null and void. This ruling is being issued on the basis of the foregoing facts as represented. However.

Very truly yours,

Mearnan

CAESAR R.DULAY

K-1 Commissioner of Internal Revenue 035884 O