Capital gain tax break : when to implement.

Title

Creator

Ompoc, Jose P., Jr.

Language

English

Source

Business Day Volume XIV (No. 132) August 29, 1980

Year

1980

Subject

Capital gains tax--Philippines.

Banks and banking--Taxation--Philippines.

Capital gains tax--Law and legislation--Philippines.

Banks and banking--Law and legislation--Philippines.

Rights

In Copyright - Educational Use Permitted

Fulltext

Friday, August 29, 1980 Page 7 ‘Supermarket’ trade houses to open soon A number of Philip pine trade houses that will operate much like supermarkets will be inaugurated soon in various foreign cities, in cluding one which may be managed by the Ayala Corporation. Contracts have been signed between the Ministry of Trade and the Chamber of Depart ment Stores, Inc., for the opening of a “super market-type” trade house in San Francisco, and the Philippine Traders Mart, Inc., for another in Los Angeles. The Los Angeles trade house manager, Jose R. F«ctora, said a “mass signing” took place last Wednesday between Trade Minister Luis R. Villafuerte, the trade house management, and first 13 store franchise holders who will set up shops in the trade house. The trade ministry implements the program of establishing the trade houses abroad to display and sell local products. Its supermarket or “ex panded trade house” concept envisions at least $42 million in annual earnings — from a mini mum quota of $2 mil lion a year per trade house, for 21 trade houses planned up to 1981. CONTRACTS. Accord ing to Norberto A. Romualdez HI, officer in-charge of the Bureau of Export Promotion, contracts will be signed shortly for two other trade houses to be set up in Miami (to be operated by the Philippine Handi crafts Producers Coop erative with 250 mem ber-firms) and in Milan (to be run by East Art Trading). The four trade houses will be inaugurated by October, he said. Negotiations are under way for the open ing of two more to be established in Honolulu and Dallas, Texas. The one at Dallas will possibly be owned and operated by Ayala Corp oration, a source said. Ayala is one of the local companies which have set up overseas trading offices (OTOs). Under the trade minis try’s expanded trade house program, manage ment of these houses will be entrusted to a group of businessmen, an OTO, or any of the Philippines’ top 100 corporations. ASSISTANCE. The trade ministry would extend financial assistance to each franchise holder or store in the supermar ket-type trade house in the form of: * a monthly subsidy for rental of the store space, amounting to $2,000 for the first six months of operation; * reimbursement of expenses on the opening or inauguration of the store, up to $2,000; * cost of freight for initial shipment (port-toport only) in a40?foot container van; and * reimbursement of promotional expenses up to $2,000 annually, Capital gains tax break: when to implement For -being the first private commercial bank to anticipate the tax breaks still to be given to banks which merge with other banks for the pur pose of obtaining a universal banking license, the Bank of the Philip pine Islands — which re cently acquired Commer cial Bank & Trust Co. — came close to being sub ject to capital gains taxes arising from the merger. This development arose yesterday during a meeting of the finance committee of the Batasang Pambansa to discuss refinements to two Cabinet bills which in tend to extend tax breaks for universal banks. D i sc u ssed were Cabinet Bill No. 40 which seeks to exempt from capital gains taxes JOSE P. OMPOC, Jr. Reporter any capital gain arising from mergers and Cabinet Bill No. 41 which seeks to amend certain sections of the National Internal Re venue Code pertaining to the taxation of earnings realized from certain banking transactions such as interest earnings on deposits. Both bills have passed first reading at the Batasan. The committee mem bers debated on the date of effectivity of the bill exempting gains taxes any capital gains. The members noted that if this bill were made effective upon its approval, then mergers before that time may be subject to capital gains taxes. Much as the members of the committee tried to avoid citing the BPIComtrust merger, they agreed that a •similar move would in fact penalize a bank which precisely was moving towards the policy ob jective of the govern ment. The issue, however, is moot. A check with BPI officials yesterday show ed that the merger with Comtrust transaction has not yet been consumma ted. arising from the merger. The BIR is studying this petition. OTHER WAYS. Even in the event that the effect ivity of the exemption is on the date of approval of the bill, stockholders of both banks would still have other legal means to capital’ gains taxes under the bill. The larger issue that the committee members tackled yesterday was whether the stockholders of banks would be exempted from capital gains taxes arising from mergers or whether pay ment of the taxes would only be deferred. The merger is yet to be formally approved by the Central Bank, although the CB has approved the transaction in principle. Incidentally, BPI has a pending application with the Bureau of Internal Revenue specifically asking for an exemption from capital gains taxes Cabinet Bill No. 40 provides for three ins tances^ when capital gains taxes may be waived. These are: * mergers or consolidations of banks through an exchange of stocks; * disposition of real or personal property, whose proceeds are to be invested in newly issued shares of bank stocks; and ♦ exchanges of real or personal property for newly issued bank shares of stocks. The committee mem bers agreed that disposi tions or exchanges of real properties for new bank stocks should be exempt ed from capital gains taxes on the capital gain arising from the disposi tion or exchange of the property. DISAGREEMENT. How ever, they disagreed on whether to grant an exemption or only a deferral of capital gains taxes on mergers or con solidations through stock swaps. During a rotation towards the end of the meeting, the assembly men were evenly divided. Of eight members pre sent, four were for defer ral while the other four were for exemption. Finance Minister Cesar Virata, chairman of the committee, declined to vote. Delta Mini-Cruiser, Tamaraw to be assembled in Egypt $ 15 million based on Delta Motor Corp, reported another break through in its export drive with the signing of an agreement in principle for the assembly and distribution of its Delta Mini-Cruiser and Tama raw in Egypt. The memorandum agreement was signed Tuesday by top officials of DMC and the ArabAmerican Vehicles Co. (AAV) of Egypt and Kel ton Trading S.A. of Geneva, Switzerland. Under the agreement, DMC will initially export 3,0 00 completely knocked-down (CKD) units of Delta Mini Cruisers and Tamaraws annually. AAV will assemble the CKD, and Kelton Trading will distribute the vehicles the Middle East, Mediterranean and South African countries. The initial minimum order of 3,000 units has an estimated value of unit prices of $5,000 per Mini-Cruiser and $4,000 per Tamaraw. PROJECTIONS. Based on its projections, DMC would export 1,836 Mini-Cruisers and Tama raws worth $9 million this year, 6,050 units worth $26.5 million in 1981, 8,250 units worth $36.5 million in 1982, 10,300 units worth $45.2 million in 1983 and 11,000 units worth $350 million in 1984. The distributorship agreement with AAV is the second major con tract signed by DMC with a foreign auto motive company for Mini Cruisers and Tamaraws. Early this year it started shipping part of a 1,000-unit export com mitment to Plan Motor Italia, S.P.A., a Turin based firm which will distribute Mini-Cruisers in the European Econo mic Community. ANNOUNCEMENT DUE TO SOME UNAVOIDABLE CIRCUMS TANCES, THE INAUGURATION OF THE SECURITIES AND EXCHANGE COMMISSION BUILDING WHICH WAS SCHEDULED ON FRIDAY, AUGUST 29, 1980 HAS BEEN POST PONED UNTIL FURTHER NOTICE. THE ANNOUNCEMENT FOR THE IN AUGURATION ON A LATER DATE WILL BE ANNOUNCED ACCORDINGLY. (SGD.) JULIO A. SULIT, JR. Associate Commissioner Tanduay aims for share in US market A 20%-30% drop in sales and the recent 100% increase in specific taxes on liquor have prompted Tanduay Dis tillery, Inc. to wage an all-out effort to pene trate the export market for its “smooth gold” and “light white” rums, Tanduay general manager Celso L. Lobregat said. Lob reg at said Tan duay will ship an initial 2,000 cases of the pro ducts on Sept. 5 to Texas and California. The com pany will try to capture 5% of the rum market in the US, he added. Long-range plans for exportation of “smooth gold” and “light white” include branching out from Texas and Cali fornia to other states and sell 30,000 to 40,000 cases in the US in five years. DISTRIBUTOR. Garner and Garner International has been designated as sole distributor of the products in the US. According to H. Clayton Garner, president and founder of Garner and Garner, his firm has earmarked a $600,000 budget to promote the products. Advertising will be handled by Ogilvy and Mather, Inc. Lobregat said the in crease in taxes (from the present Pl.20 to P2.40 per proof liter) on liquor, including beer, is expect ed to further slash sales in the domestic market, considering it will also jack up prices of the pro ducts by at least P0.80 per bottle. Prospects in the US market are brighter. Gamer said rum is the fastest-growing liquor category and second to vodka in sales ranking in the US. The increase in rum sales in 1979 was 134% compared to vodka’s 6%. Garner added that Tanduay is likely to grab a good share of the rum market in the US. He said Bacardi, , a leading Puerto Rican brand sold in the US, is having dif ficulties in its production because of “limited re sources.” the Inauguration and blessing August 30, Saturday, 4:00p.m. FEATURING: Imelda Papin*Eva Eugenio*Kuh Ledesma Ellen Esguerra* Gina Von Giese*Frieda Fonda (Body Language)«Nail Clippers. WEA Dancers Hosted by: Ronald Remy, Nova Villa, Orly Punzalan & Ritchie. ★★INTERNATIONAL MALL** A new exciting shopper's paradise is opening its doors to the public. It's called the INTERNA TIONAL MALL where you can experience the class and sophistication of authentic imported items. Luxurious merchandise to suit even your discriminating taste. With 141 stalls of imported goods & materials from the best shopping & fashion houses all over the world. Located at the Lower Ground Floor of the V.V. Soliven Towers. For safe, convenient & easy shopping, we've got ample free parking space for you. An Adjacent 2,000sqms., another 4,000sqms. next to Condo I, and the Basement Parking area aside from parking along Florida, Annapolis, and EDSA.We're FULLY AIR-CONDITIONED. SOLID HOMES SAVINGS & LOAN ASSOCIATION, INC. The Bank with Solid Banking Ideas is opening its Head Office at the Upper Ground Floor of the V.V. Soliven Towers. For your financial growth & development, we are geared to set up complete banking facilities to complement our banking expertise, skills & resources, in line with the expanded services under Unibanking. INTERNATIONAL . Magnol^ After shopping & business, there's the VVS Magnolia House to complete your day. Delightful snacks from a variety of short orders & sandwiches, flavorful shakes & sodas, thirst-quenching drinks & all-time ice cream preparations & favorites that never fail to tickle the palate awaits your sampling at our outlet at the Upper Ground Floor of the V.V. Soliven Towers. Come and Visit us. We'll be waiting for you. Snacks & soft drinks courtesy of Purefoods, Pepsi Cola, Coca Cola, Magnolia & Presto. V. V. SOLIVEN TOWERS I EDSA, cor. Annapolis, ■ Fronting Camp Aguinaldo, Greenhills, M.M. BB Tels. 78-99-61 to 82 5 MEMBERS OF THE V.V. SOLIVEN GROUP OF COMPANIES

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