Tax exemption rules for cooperatives approved

The Joint Congressional Oversight Committee on Cooperatives on Monday approved the

Implementing Rules and Regulations (IRR) that would lay down the guidelines for the grant
of tax exemptions to cooperatives nationwide, Senate Majority Leader Juan Miguel Zubiri
announced.
Zubiri, primary author of the new Philippine Cooperative Code of 2008 and who is the
chairman of the JCOCC, said the Joint Rules and Regulations would now allow cooperatives in
the country to better serve their members, without worry of restraints due to lack or
shortage of funds.
"This is good news for 75,000 cooperatives all over the country. They have long been waiting
for these guidelines so they could operate more freely and easily, without worrying about
financial resources," he said.
The joint rules and regulations, he said, are a product of the combined efforts of the Bureau
of Internal Revenue (BIR) and the Cooperative Development Authority (CDA) in compliance
with the provisions of the Philippine Cooperative Code of 2008.
Among others, the Joint IRR elaborates on the tax exemptions of the different categories of
cooperatives, particularly duly registered cooperatives which transacts with members only
and duly registered cooperatives which transact business with members and non-members.
Under the IRR, all duly-registered cooperatives enjoy exemption from transactions with
insurance companies and banks.
Also, cooperatives dealing exclusively with members are exempt from payment of any taxes
and fees, including but not limited to, income tax, percentage tax, donor's tax, excise tax,
documentary tax, and the annual registration fee of P500.
Electric cooperatives are also exempt from payment of Value Added Tax (VAT) on systems
loss and VAT on the distribution of electricity to their members.
Cooperatives doing business with members and non-members with accumulated reserves
and undivided net savings of not more than P10 million are exempted from the same taxes
as those that deal with members only.
Likewise, business transactions with members of duly registered cooperatives which have
accumulated reserves and undivided net savings of more than P10 million are exempted
from all national internal revenue taxes for which it is liable.
On the other hand, duly registered cooperatives with accumulated reserves and undivided
net savings of more than P10 million dealing with non-members shall pay their income taxes
and VAT at their full rate, subject to some exemptions.
VAT, will not be collected against sales by agricultural cooperatives, including sales to nonmembers, importation of direct farm inputs, machineries and equipment, including spare
parts, to be used directly and exclusively in the production and/or processing of their

produce; gross receipts from lending companies by credit or multi-purpose cooperatives; and
sales by non-agricultural, non-electric and non-credit cooperatives.
The Joint IRR also elaborates on the requirements to be submitted and the procedure to be
followed by the cooperatives to obtain a new certificate of tax exemption from the BIR and
the renewal of the same.
"This will be very beneficial to the cooperatives industry," Zubiri said, "I congratulate all
those who worked hard for the completion of these guidelines.