BIR Ruling

January 8, 1974 Mrs. Patria G. Abella President Manila City Hall Consumers Cooperative, Inc. City Hall, Manila M a d a m : This refers to your letter dated September 11, 1973 requesting information whether or not the Manila City Hall Consumers Cooperative, Inc. for operating a canteen jointly with a grocery is exempt from the payment of privilege tax under the provisions of Republic Act No. 2023, as amended. aisa dc In reply, I have the honor to inform you that pursuant to Section 11 of Presidential Decree No. 175 promulgated on April 14, 1973, all cooperative laws whether agricultural or non-agricultural are considered repealed. In effect, Section 66 of Republic Act No. 2023, as amended by Republic Act No. 4362 granting exemption to registered non-agricultural cooperative from the payment of privilege tax is deemed repealed. However, if the Manila City Hall Consumers Cooperative, Inc. has complied with the requirements of Presidential Decree No. 175, particularly Section 8 thereof which requires existing cooperatives to re-register or file application or petition for re-registration with the Department of Local Government and Community Development through the Bureau of Cooperatives Development within the period of six (6) months from the date of the promulgation of the said Decree, its corporate existence in deemed to continue and is entitled to exemption from the payment of income and sales taxes in accordance with Section 5 of said Presidential Decree which provides: "Section 5. Privilege of Cooperatives . Cooperatives shall enjoy the following privileges: (a) Exemption from income taxes and sales taxes provided that a substantial portion of the net income of the cooperative is returned to members in the form of interests and/or patronage refunds; Provided, further, that for income tax purposes, non-agricultural cooperatives shall be exempt for a period of five (5) years and agricultural cooperatives for a period of ten (10) years reckoned from the date of registration with the Department of Local Government and Community Development; Provided, finally, that the taxable income shall mean that portion of the cooperative's income after deducting the interest paid to members and patronage refunds." If the Cooperative is exempt from the sales tax, then it will be exempt from the payment of the fixed or privilege tax. cdt Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5 "TAXPAYERS SHOULD INDICATE THEIR TAN IN ALL COMMUNICATIONS TO THE BIR."