Question & AnswerQ&A (BIR REVENUE MEMORANDUM ORDER NO. 76-2010)
It prescribes policies and guidelines for the issuance of Certificate of Tax Exemption for cooperatives and their monitoring, in line with Republic Act No. 9520 (Philippine Cooperative Code of 2008).
Republic Act No. 9520, also known as the Philippine Cooperative Code of 2008.
Transactions of members with cooperatives are exempt from any imposition of taxes and fees.
The Revenue District Offices (RDO) and Revenue Regions having jurisdiction over the principal place of business of the cooperatives process these applications instead of the National Office.
Duly accomplished BIR Form No. 1945, certified true copies of Articles of Cooperation and By-Laws certified by CDA, new Certificate of Registration issued by CDA, current Certificate of Good Standing from CDA, BIR Certificate of Registration, and a certification under oath of the list of cooperative members with TIN and capital contributions.
Initially, members without TIN may use other government-issued ID numbers temporarily, but subsequently, all members should secure a TIN with the BIR for updated submissions.
Failure to submit the yearly required documents such as Certified True Copy of the Certificate of Good Standing, certification under oath regarding the cooperative's status, summary of records of transactions, or list of members with TIN and share capital contribution.
Exemptions include income tax, value-added tax, percentage tax, donor's tax on certain donations, excise tax directly liable to the cooperative, documentary stamp tax, annual registration fee, taxes on transactions with insurance companies and banks, and VAT exemptions specifically for electric cooperatives.
Cooperatives with reserves and net savings not exceeding Php 10 million are exempt from all national internal revenue taxes enumerated, while those with reserves exceeding Php 10 million pay taxes on transactions with non-members but remain exempt on business with members.
Income tax on net surplus from non-member transactions, VAT on non-member sales with stated exemptions (especially for agricultural cooperatives), applicable percentage taxes, and other internal revenue taxes unless exempted by law.
Yes, all income not related to the main business activities is subject to the appropriate taxes under the NIRC.
They are considered withholding agents for all income payments subject to withholding under Revenue Regulations No. 2-98, including withholding on compensation and creditable/final withholding taxes, with an exemption for employees who are minimum wage earners.
Filing of a duly accomplished BIR Form No. 1945 with the required documentary attachments at least two months before expiration, complying with the procedures indicated in Sections 5 and 6 of the Order.
It becomes ineligible to apply or continue to hold a Certificate of Tax Exemption, which may result in refusal or revocation of tax exemption benefits.