RMC No. 72-2003: Specifies the tax implications of Electric Cooperatives registered with the National Electrification Administration and Cooperative Development Authority

Key points

1. Exemptions. ECs registered with the NEA or CDA are entitled to various tax exemptions specified in the Circular.
2. Taxes on interest and deposits. All ECs pay 20% final income tax on interest from any currency bank deposit, on yield or other monetary benefit from deposit substitutes and trust funds and similar arrangements, and on royalties from Philippine sources. They also pay 7.5% final income tax on interest income from a depository bank under the expanded foreign currency deposit system.
3. Capital gains and documentary stamp tax. ECs pay Capital Gains Tax on sales or exchanges of real property classified as capital assets or of shares of stock. They pay Documentary Stamp Taxes on dealings with non-members when accumulated reserves and undivided net savings exceed P10 Million.
4. VAT and other taxes. ECs bear VAT billed on purchases of goods and services that are not exempt. They also pay all other taxes from which they are not expressly exempted by law.
5. Withholding agents. All ECs are withholding agents. They file withholding tax returns and remit withholding taxes on all income payments subject to withholding.

Who is affected

• Electric Cooperatives registered with the NEA or CDA