RMC No. 124-2020: Clarifies certain provisions of RMO No. 76-2010 in relation to the Joint Rules and Regulations implementing Articles 60, 61 and 144 of RA No. 9520 (Philippine Cooperative Code of 2008) and other related revenue issuances

Key points

1. Certificate of Tax Exemption application. Cooperatives apply for a Certificate of Tax Exemption (CTE) using BIR Form No. 1945 with documents from the CDA and BIR, such as Articles of Cooperation and By-Laws, Certificate of Registration, Certificate of Good Standing and a sworn list of members with TINs and capital contributions. Renewal also requires the audited financial statements of the preceding year.
2. Yearly submissions. With the Annual Income Tax Return due on or before the 15th day of the fourth month after the close of the calendar year, cooperatives submit the Certificate of Good Standing, a sworn certificate on type of cooperative, reserves, net surplus and at least 25% of net surplus returned to members, a yearly summary of transactions, and a sworn list of active and inactive members.
3. Member TINs. If member TINs are not yet available, the CTE may still be issued on a sworn list of members with full name and capital contribution. The TINs must be submitted within six (6) months from CTE issuance, and failure without justifiable reason is a ground for revocation under RMC No. 102-2016. Inactive members as defined by the CDA need no TIN.
4. Exemptions. Interest income from savings and time deposits of members of a lending cooperative is exempt from taxes under Articles 60 and 61 of RA No. 9520. Transactions between a cooperative and its members are not subject to Documentary Stamp Tax.
5. Withholding tax and deductions. The employer’s share to GSIS, SSS, Medicare and Pag-IBIG is excluded from gross income and allowed as a deduction under Section 34 (A)(1)(a) of the NIRC. A cooperative that is not a Top Withholding Agent is exempt from the 1% and 2% creditable withholding tax on isolated purchases of not more than P 10,000 each from non-regular suppliers.
6. Audit priority and assessment remedies. Cooperatives dealing with members and non-members with accumulated reserves and undivided net savings of more than Ten Million Pesos (Php 10,000,000.00), and those with income unrelated to their main business, are prioritized for audit. As with ordinary taxpayers under Section 228, a cooperative has 15 days to respond to a PAN and 30 days to protest a FLD/FAN or appeal or protest a FDDA, or the assessment becomes final, executory and demandable.

Who is affected

• Cooperatives with or applying for a Certificate of Tax Exemption
• Members of cooperatives
• Revenue District Offices

Deadlines and effectivity

• Annual submissions with the Annual Income Tax Return due on or before the 15th day of the fourth month after year-end
• Member TINs within 6 months from CTE issuance
• PAN response within 15 days
• FLD/FAN protest within 30 days