BIR Ruling No. 334-2020

BUREAU OF INTERNAL REVENUE REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE

Quezon City

Sec.127B);RR 6-2008 BIR Ruling No. 349-16 BIR Ruling No. 406-16 0T-0334-2020 JUN 1 6 2020

SYCIP GORRES VELAYO & CO. 6760 Ayala Avenue 1226 Makati City

Attention: Atty. Maria Margarita D. Mallari-Acaban Principal, Tax Services

Gentlemen:

secondary sale of CCPH's shares of stock through an initial public offer ("IPO") done through the Comp Technology (Philippines) Inc. (CCPH, for confirmation that the primary and/or imposed under Sec. 127(B) of the 1997 National Internal Revenue Code ("Tax Code), as facilities of the Philippine Stock Exchange ("PSE") will not be subject to the percentage tax amended. This refers to your letter dated January 11, 2019 requesting on behalf of your client, Cal-

Background:

Technology Center -- Special Economic Zone, Lipa City, Batangas. It is primarily organized -- Commission (SEC) under SEC Registration No. (TIN) 1. CCPH is a domestic corporation duly registered with the Securities and Exchange . Its principal place of business is at Block 7, Lot 1, Main Boulevard, Lima with Tax Identification Number

the calibration of testing tools and equipment in support of the manufacturing manufacturing of electronic equipment of every kind as well as their spare parts; the manufactured electronic equipments in the Philippines and for export thereof." processes, and to engage in the marketing, sale and distribution for wholesale of -"To engage in the importation of raw materials, experimentation, testing and

2. CCPHhas acapital stock of Shares with par value of ) and said capital stock is divided into ( ) each. Pesos

2019, as approved by the Commission in a Pre-Effective Letter dated October 18, 2019, CCPH sought the registration of 3.In the Amended Registration Statement filed by CCPH with the SEC on September 2 common shares, broken down as follows:

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Primary Offering Initial Public Offering Over-Allotment Option Over-Allotment Option Issued and Outstanding Shares Not included in the Offer Total To be offered and sold by way of To be offered and sold pursuant to an common shares common shares common shares At an initial public At an initial With par value of P per share offering price of up to P offering price of up to P per share per share public

common shares

sold by way of primary offering, while outstanding capital stock will be offered and sold pursuant to an over-allotment option. The not be included in the offer -- remaining Of these, common shares from CCPH's unissued capital stock will be offered and common shares from CCPH's issued and outstanding capital stock will common shares from CCPH's issued and

Issued and Outstanding Capital Stock Unissued Capital Stock As of 08/08/2018 General Information Sheet Authorized Capital Stock Total par value (in Peso)

Registered for listing

Less: Shares for Primary Offering Unissued Shares After IPO (1) Primary Offering Unissued Capital Stock Before IPO (out of the Unissued Capital Stock)

(2) Over-Allotment Option (out of the Issued and Outstanding Capital Stock)

Issued and Outstanding Capital Stock Before IPO Less: Shares for Over-Allotment Option

in the Offer) Issued and Outstanding Capital Stock (not included

(not included in the Offer) (3) Issued and Outstanding Capital Stock

After the IPO

Issued and Outstanding Capital Stock Authorized Capital Stock

Unissued Capital Stock

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4.CCPH has a total of ten (10) corporate and individual shareholders.

Listed below are the details of CCPH's subscribers :

Total ThailandPCL Gregory L. Shih-Tung Yu (Singapore) Pte. Ltd Shen, Shyh- Khongsit Choukitcharoen Lo, Guo-Lun Huang Kuan- Jen Cirilo P.Noel Emmanuel M. Lombos Cal-Comp Electronics Kinpo International Yong Domingo Subseriber Name of Singaporean Singaporean Nationality Taiwanese Taiwanese Taiwanese Taiwanese Filipino Filipino Thai Thai No. of Shares Subscribed Subscribed and Amount Paid % Ownership

(Singapore) Pte. Ltd.) is a corporation duly registered and existing under the laws of Singapore with the following shareholders2: 5.Kinpo International (Singapore) Pte. Ltd. ("KPSG) (formerly: Kingbolt International

Kinpo Electronics Inc. (KPO) Total Hsu Sheng-Hsiung @ Rock Hsu Name of Subscriber Subscribed Shares No. of Ownership %

KPSG holds (a) 80.81% of CCPH and (b) 6.60% of Cal-Comp Electronics (Thailand) PCL.

Based on the Certified true copy of the Business Profile of KPSG and the Certified true copy of the Register of Members of KPSG Based on the Certified true copy of CCPH's General Information Sheet dated August 8, 2018.

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A

CCPH,with 6. Cal-Comp Electronics (Thailand) PCL (CCET) is another corporate stockholder of % ownership in CCPH's outstanding shares of stock.

Of: CCET is listed in the Stock Exchange of Thailand and has stockholders3, consisting

Corporate Total Individual Type of Shareholder Shareholders No. of ownership in CCET Combined %age of % %

Listed below are the Top 5 shareholders of CCET4:

Name of Subscriber No. of Shares %

Kinpo International (Singapore) Pte. Ltd. Kinpo Electronics Inc. (KPO) Far Eastern International Bank (KPSG) Subscribed Ownership % %

KGI Asian Limited Chern Kuan-Jan Others Total

of Taiwan, in turn, holds 7.Kinpo Electronics. Inc. ("KPO), a corporation duly registered and existing under the laws % of KPSG and % of CCET.KPO is listed in the Taiwan Stock

Exchange and has shareholders5, consisting of:

Total Individual Corporate Shareholder Type of Shareholders No. of Combined %age of ownership in KPO % % %

In support of your request, you submitted the following documents:

a Certified copy of the Amended Articles of Incorporation of CCPH

b)Certified copy of the 2018 General Information Sheet of CCPH

c)Authenticated copy of the Articles of Incorporation of KPO

d)Authenticated Certification on registration of KPO

e)Authenticated List of Major Stockholders of KPO

f)Authenticated Distribution Profile and Share Ownership of KPO

Based on the Authenticated shareholder registration certificate Based on the Authenticated list of stockholders of CCET. Based on the Authenticated distribution profile of share ownership of KPO

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g)Authenticated copy of the Registration Certificate of CCET h) Authenticated Certificate on registration of CCET i Authenticated List of Top 20 Stockholders of CCET j)Authenticated copy of the Shareholder Register of CCET k)Certified and authenticated copy of the Constitution of KPSG n) Notarized Certification on Kinpo Group's ownership structure 1)Certified and authenticated Business Profile of KPSG m) Certified and authenticated copy of the Register of Members of KPSG p) Certified true copy of Amended Registration Statement filed with SEC on September 2. q)Certified true copy of SEC Pre-Effective Letter dated October 18, 2019 o) Notarized Sworn Statement 2019

In reply thereto, please be informed that:

Section 127(B) of the Tax Code of 1997, as amended, provides that:

through the Local Stock Exchange or through Initial Public Offering. "Sec. 127. Tax on Sale, Barter or Exchange of Shares of Stock Listed and Traded

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as defined herein, a tax at the rates provided hereunder based on the gross selling price or gross value in money of the shares of stock sold, bartered, exchanged or otherwise disposed in accordance with the proportion of shares of stock sold, bartered, exchanged or There shall be levied, assessed and collected on every sale, barter, exchange or other otherwise disposed to the total outstanding shares of stock after the listing in the local stock disposition through initial public offering of shares of stock in closely held corporations. (B) Tax on Shares of Stock Sold or Exchanged through Initial Public Offering.

exchange:

Over twenty-five percent (25%) but not over thirty-three and one third percent (33 1/3%) Up to twenty-five percent (25%) 4% 2% Over thirty-three and one third percent (33 1/3%) 1%

The tax herein imposed shall be paid by the issuing corporation in primary offering or by the seller in secondary offering.

For purposes of this Section, the term 'closely held corporation' means any

corporation at least fifty percent (50%) in value of the outstanding capital stock or at least fifty percent (50%) of the total combined voting power of all classes of stock entitled to

vote is owned directly or indirectly by or for not more than twenty (20) individuals.

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insofar as such determination is based on stock ownership, the following rules shall be applied: For purposes of determining whether the corporation is a closely held corporation,

proportionately by its shareholders, partners or beneficiaries. corporation, partnership, estate or trust shall be considered as being owned (1) Stock Not Owned by Individuals. -- Stock owned directly or indirectly by or for a

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corporation pertains to a corporation at least fifty percent (50%) in value of the outstanding capital stock or at least fifty percent (50%) of the total combined voting power of all classes of stock Thus, under Section 2(q) of Revenue Regulations (RR) No. 6-2008, a closely-held

entitled to vote of which is owned directly or indirectly by or for not more than twenty (20) individuals. For purposes of determining whether the corporation is a closely-held corporation, it

is provided therein that stock owned directly or indirectly by or for a corporation, partnership.

estate, or trust shall be considered as being owned proportionately by its shareholders, partners, or

beneficiaries.

Since CCPH is owned by several individual and corporate shareholders at the time of the

application to list the shares of CCPH with the PSE, the CCPH shares held by corporate

shareholders will be considered as being proportionately owned by the shareholders of said

corporations.

In the case of a multi-tiered corporation, the stock attribution rule must be allowed to run

continuously along the chain of ownership until it finally reaches the individual stockholders. This

is in consonance with the "grandfather rule" adopted in the Philippines under Section 96 of the

Corporation Code (Batas Pambansa Blg. 68) which provides that notwithstanding the fact that all

the issued stocks of a corporation are held by not more than twenty persons, among others, a

corporation is nonetheless not to be deemed a close corporation when at least two thirds of its

voting stock or voting rights is owned or controlled by another corporation which is not a close

corporation.

Following the stock attribution rule, the effective ownership of the individual and corporate

KPO & CCET stockholders in CCPH must be computed:

a.80.81% of the outstanding shares of CCPH are owned by KPSG.

Since KPSG is a wholly owned subsidiary by KPO, the shareholders of KPO

consisting of individual and corporate stockholders, are considered to indirectly

hold of the outstanding shares of CCPH through KPSG.

% of the outstanding shares of CCPH are owned by CCET. 6

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KPO are considered to indirectly hold owns CCET. Since KPO directly owns of the ownership of CCET in CCPH. In turn, the shareholders of of the outstanding shares of CCET, KPO effectively of the outstanding shares of CCPH through

ownership of CCET in CCPH. In turn, the shareholders of KPO are considered to indirectly is a wholly owned subsidiary of KPO, KPO effectively owns hold Since KPSG directly owns 1% of the outstanding shares of CCPH through KPSG and through CCET. of the outstanding shares of CCET and since KPSG of the C

To summarize, the total effective ownership of KPO shareholders in CCPH is 89.83%:

Through KPSG (KPO equity in KPSG) (KPSG equity in CCPH)

Through KPSG-CCET

(KPO equity in KPSG)

(KPSG equity in CCET) (CCET equity in CCPH)

Through CCET (KPO equity in CCET)

(CCET equity in CCPH)

Effective ownership of KPO shareholders in CCPH

The individual and corporate stockholders of KPO and CCET effectively owns CCPH.

individual KPO stockholders effectively owns of the effective ownership of KPO in CCPH is owned by individuals. Hence,the of CCPH. On the other hand. of

the direct ownership of CCET in CCPH is also owned by individuals, which means that

effectively owned by individuals. individual CCET stockholders effectively owns of CCPH.In total, of CCPH is

KPO shareholders as disclosed above:

CCET shareholders as disclosed above: Corporate Total Individual Type of KPO shareholder shareholders No. of ownership in KPO Combined %age of

Individual Type of CCET shareholder shareholders' No. of ownership in CCET Combined %age of

Total Corporate

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Individual stockholders of KPO and CCET in CCPH Effective ownership of individual KPO stockholders in CCPH Effective ownership of individual CCET stockholders in CCPH and CCET in CCPH Effective ownership of % (% ownership of % (direct ownership of CCET in CCPH) (% ownership of (effective ownership of KPO in CCPH) individual stockholders in CCET) individual stockholders of KPO individual stockholders in KPO) stockholders individual No. of ownership in CCPH Effective

corporate stockholders. Hence, the corporate stockholders of KPO effectively owns owned by corporate stockholders other than KPO and KPSG, which means that corporate CCPH. On the other hand, stockholders of CCET effectively owns owned by corporate stockholders. Moreover, of the % of the effective ownership of KPO in CCPH is owned by % of CCPH. In total, % direct ownership of CCET in CCPH is also % of CCPH is effectively %of

Corporate stockholders of KPO and CCET in CCPH corporate No. of ownership Effective

Effective ownership of corporate KPO stockholders in CCPH stockholders in CCPH %

(% ownership of orporate stockholders in K'PO)

Effective ownership of corporate CCET stockholders in CCPH % (effective ownership of KPO in CCPH) %

% (% ownership of corporate stockholders in CCET, excluding KPO and KSPG)

%(direct ownership of CCET in CCPH)

Effective ownership of corporate stockholders of KPO and %

CCET in CCPH

CCPH is 58.94% while the effective ownership of corporate stockholders of KPO and CCET in To summarize, the effective ownership of individual stockholders of KPO and CCET in

CCPH is 40.38%:

Effective ownership of individual stockholders of KPO and CCET in Stockholders and Effective ownership stockholders No. of ownership Effective

CCPH

Total Effective ownership of corporate stockholders of KPO and CCET in CCPH % %

indirectly hold Based on the foregoing, a total of % of CCPH's outstanding capital stock,which is more than the individual stockholders of KPO and CCET % threshold

under Section 127(B) of the Tax Code of 1997, as amended.

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Applying the stock attribution rule,CCPH is not a closely held corporation since more than % of CCPH's outstanding capital stock are indirectly owned by more than 20 individual stockholders of KPO and CCET (both publicly listed corporations in Taiwan and Thailand,

respectively). As such, CCPH should not be subject to percentage tax under Section 127(B) of the

Tax Code of 1997, as amended, for its initial public offering.

Accordingly, this Office is of the opinion, as it hereby holds, that the sale of CCPH's shares

of stock (consisting of common shares for primary offering and common

shares in the exercise of over-allotment option), done through the facilities of the PSE will not be

subject to the IPO tax imposed under Section 127(B) of the Tax Code of 1997, as amended. (BIR

Ruling Nos. 406-16 dated November 22, 2016; 349-16 dated October 6, 2016; 238-12 dated March

29, 2012; and 148-10 dated December 17, 2010)

This ruling is being issued on the basis of the foregoing facts as represented. However, if

upon investigation, it will be ascertained that the facts are different, then this ruling shall be

considered as null and void.

Very truly yours,

1ou3ae

CAESAR R. DULAY

Commissioner of Internal Revenue 03424

K-1 gps(cal-comp IPO)