Question & AnswerQ&A (CDA)
The scope is to implement Articles 60, 61, and 144 of RA No. 9520 granting tax exemption to cooperatives, prescribe guidelines for the availment thereof, and other purposes as provided under Sections 4 and 244 of the National Internal Revenue Code of 1997, as amended.
Conflicts or ambiguities shall be resolved and construed liberally in favor of the cooperatives and their members as provided for in Article 142 of RA 9520.
Accumulated Reserves refer to money annually deducted from the net surplus—less than 50% for the first 5 years and at least 10% thereafter—intended not for distribution but for protection and stability of the cooperative, commonly called the Reserve Fund.
It is a certificate/ruling issued by the BIR granting tax exemption to a cooperative valid for five years from the issuance date.
Types include Credit Cooperative, Consumer Cooperative, Producer Cooperative, Marketing Cooperative, Service Cooperative, Multipurpose Cooperative, Advocacy Cooperative, Agrarian Reform Cooperative, Cooperative Bank, among others.
They are exempt from income tax, VAT, percentage tax, donor's tax on certain donations, excise tax, documentary stamp tax, annual registration fee, taxes on transactions with banks and insurance companies, and specific exemptions for electric cooperatives.
They are subject to full income tax on allocated interest on capitals, VAT on transactions with non-members except certain exemptions, percentage tax on sales to non-members except for producer, marketing or service cooperatives, and other internal revenue taxes.
Yes, cooperatives are subject to capital gains tax on sales of shares of stock or sale, exchange or disposition of capital assets.
A certified copy of CDA Certificate of Registration, Articles of Cooperation and By-laws, current Certificate of Good Standing from CDA, and BIR Certificate of Registration.
The certificate is valid for five years from issuance. Cooperatives must submit a current Certificate of Good Standing from CDA, Income Tax Return, and Audited Financial Statements annually by April 15.