BIR Ruling No. 331-2021

BUREAU OF INTERNAL REVENUE REPUHLIGOFTHE PHHPINES DEPARIMENT OF FINANCE

Quezon (ity

BT- 331 - 2021 SEP...20_.2021

Bagumbayan, I[ lo Quezon City Eastwood City Cyberpark EMPERADOR, INC. 7th Floor, 1880 Eastwood Avenue 188 E. Rodrigues Jr. Avenue

Attention: DR. ANDREW L. TAN (hairman Gentlemen:

from stock transaction tax (STr) imposed under Section 127 of Tax Code of 1997, as amended. confirmation that the intended disposition of the Emperador shares listed in the Philippine Stock Exchange ("PSE") through listing in Singapore Stock Exchange ("S(X") is exempt This refers to your request, on behalf of Emperador, Inc. ("Emperador"). for

transaction is as follows: approved its pursuit of a Secondary Listing on the Main Board of the SGiX in order to create visibility and international investor participation: that it is now in the process of complying the PSE; that it is optimistic that its Secondary Listing will serve as a catalyst to bring about a future strategic collaboration between the PSE and the SGX: and that the outline of the established footprint in over 100 countries and currently enjoys leading market positions in brandy and whisky in the locat and international markets: that its Board of Directors stronger awareness of Enperador and its wortd-class brands. as well as increase its stocks' with all the necessary requirements for a Secondary Listing on the SGX; that its common shares are listed and traded with the PSE and will continue to maintain its primary listing in It is represented that Emperador is one of the leading global spirits brand with

1. Pursuant to a capital market exercise. certain stockholders of Emperador be listed shares in the PSF and cleared through the facilities of SGX. There shares and only the number of listed shares sold by stockholders of Emperador to the brokers of SGX can be traded in SGX: pursue secondary trading of Emperador shares in the said foreign stock exchange. C'onsequently. all shares that will be traded in S(X will have to will be no secondary trading of over-the-counter_or_non-PSE-listed shall sell substantial number ot listed shares thru PSE: to brokers of SGX) This will effectively create a pool of'shares within SGX for their brokers to

2. As there is now borderless transaction of securities in the international stock of Emperador shares is disclosed to the public by SGX dails : and exehanges. there will now he scriptless trading of Enperador stocks in both PSE: and SGX. As part of trading monitoring system. the daily trade volume

3. To effect the secondary trading. the centrai depository and clearing house of SGX or T he Central Depository (CDP) will work with the central depository in order to. among others, be abte to properly reflect the beneficial owners of the new owners/buyers: and clearing house of PSE or Philippine Depository & Trust (orp. (PDTC) of Emperador shares traded through the SGX. Thus. any succeeding trading traded via SGX can be duly recorded in the books of Emperador in the name of Emperador shares in the SGX will have to be reconciled hy PDTC and CDP such that any transfer of ownership of Emperador shares executed and

PSE-tisted Emperador shares through secondary listing in SGX is outside of. and exempt trom, the tax imposed by Section 127 (A) of the Tax Code of +997, as amended. Based thereon, you now request for confirmation that the intended disposition of the

amended, provides that: In reply, please be informed that Section 127(A) of the Tax Code of 1997. as

Traded through the Local Stock Exchange or Through Inirial Puhlic Offering." (A) Tax on Sale, Barter or Exchange of Shares of Stock Listed and Traded "SEC. 127. Tux on Sale, Barter or Exchunge of Shares of Stock Listed and disposed which shuall he puid hy the seller or transferor. (Underscoring supplied} through the Local Stock Exchunge. --- There shall he levied. ussessed one percent (6/10 of 1%) of the gross selling price or gross value in money of the shares of stock sold. hartered. exchanged or otherwise and collected on every sale, barter_exchange or other disposition of than the sale by a clealer in securities. a tax u the rate of six-tenths of shures of stock tisted and traded through the local stock exchunge other

bartered, exchanged or otherwise disposed. (6/10 of' 1%) of the gross selling price or gross value in money of the shares of stock sold. barter. exehange or other disposition of shares of stock listed and traded through the local stock exchange or the PSE is subject to the stock transaction tax of six-tenths of one pereent As prescribed by Section 127 of the Tax Code of 1997. as amended. every sale.

exemption but taxes every transfer of' shares. percentage tax. which is a business tax imposed on the gross selling price oft the shares of Tocation of the transferee. It is a final tax on income from such disposition of shares of stocks and Section 127 of the Tax Code of 1997. as amended. as worded. does not admit of any tax stock sold. bartered. exchanged or otherwise disposed of. irrespective of the nationality or In transactions involving stock transfer in any stock exchange. the tax is classitied as a

tisted Fmperador shares are still ultimately executed thru the trading sy stem or fhcilities of stock exchange due to technological advances in modern commerce which make possible exchanges. However. the intended trading of the Emperador shares from PSE: to SCX. Philippines regardless of where the said shares are sotd. The fact remains thatt notwithstanding the participation of SGX in the trading transactions. the uderiying P'SE- mutual cooperation and borderless trading of securities across and between foreign stock whether in the primary or secondary stage. still involves disposition of shares from the In the case of Emperador, it is now in the process of listing its shares outside the local

the PSE. And, as represented, there will be no secondary trading of over-the-counter or non- PSE-listed shares and only the number of listed shares sold by stockholders of Emperador to the brokers of SGX can be traded in SGX. Thus, given these cireumstances, it is our considered view that the intended disposition of the Emperador shares still falls within the ambit of Section 127 of the Tax Code of 1997, as amended.

imposed therein, which include STT for listed and traded shares under Section 127 of the Tax Code of 1997, as amended, must be paid as a condition for the transfer to be so recorded in the books of the corporation. It reads: "C onsolidated Regulations Prescribing the rules on the Taxation of Sale. Burter. Exchunge or other Dispositrion of Shares of Stock Held us Capitul Assets "- provides that the taxes Furthermore, Section 11 of Revenue Regulations No. 6-2008, as amended, entitled

cuse of non-payment of tax. Any stock transfer agent or secretury of the corporation or the stockbroker, who caused the registration or tramsfer of ownership or title of any share of stock in violation of the uforementioned requirements shall be punished in accordance with the provisions of the Title X, (hapters I und II of the Tax (Code, as umended. exchange, transfer or similar transaction intended to convey ownership of. ort title to umy share of stock shall he registered in the books of the corporation unless the receipts of payment of the tux herein imposed is filed with and recorded by the stock transfer agent or secretary of the corporation. It shuall he the duty of the aforesaid persons to inform the Bureau of Internal Revenue in "SEC.I1. EFFECT OF NON-PAYMENT OF TAX.- No sue

successive trading of your Emperador shares as listed and traded primarily through the PSE coverage of. STT under Section 127 of the Tax Code of 1997, as aunended. and secondarily through the SGX. cannot be exempted from, but shall remain within the Consequently. we reiterate the view that - given the aforesaid circumstances - every

disposition of PSE-listed Emperador shares through secondary trading in SGX, is hereby denied for lack of legal basis. from STT imposed under Section 127 of the Tax Code of 1997. as amended. on the intended In view of all the foregoing, your request for exemption of the aforesaid transaction

Please be guided accordingly.

Very truly yours.

0*0l

K - Commissioner of Internal Revene CAESAR R. DULAY DA5g2 U