BIR Ruling

December 27, 1977 Taxability of Cooperatives under PD 775 This refers to our letter to you dated November 16, 1977 advising you that "as it appears that Cooperative is registered with the Sugar Quota Administration pursuant to Section 4(1) of Presidential Decree No. 388, as amended by Presidential Decree No. 775, it is exempt from the payment of the merchant's sales tax, the income tax, and all other percentage taxes of whatever nature and description pursuant to Section 4(1) of the aforementioned law in relation to Section 48 of Act No. 3425, as amended by Republic Act No. 702". However, you are also advised that if, after investigation, it is verified that the sugar cane it caused to be milled into sugar are owned by the cooperative and the resulting sugar thus milled is likewise owned by it, the share of that cooperative in the sugar so milled is exempt from the 2% tax. In an investigation conducted by examiners of this Office, it was ascertained and confirmed: (a) That the sugar canes which that Cooperative caused to be milled by National Sugar Development Corporation, Pampanga Sugar Development Co., Inc., Central Azucarera de Tarlac, and Central Azucarera y Refineria de Bataan, Inc. (Carebi) belong to that cooperative; and (b) That it is that Cooperative which shares in the sugar milled by said Centrals and not its planter-members. In view of the foregoing, our aforesaid ruling holding that Cooperative exempt from the 2% tax on its share of the sugar so milled as hereby affirmed. The National Sugar Development Corporation, Pampanga Sugar Development Co., Inc., Central Azucarera de Tarlac, and Carebi have been advised of this ruling. cdt