BIR Ruling

November 24, 1977 Tax on Cooperatives Registered with Sugar Quota Administration . This refers to your letter dated October 24, 1977 requesting that the share of that cooperative in the sugar which it caused to be milled with the First Farmers Mill and Marketing Cooperative Association, Inc. be exempted from the 2% tax prescribed in Section 203 (formerly Section 189) of the Tax Code of 1977. From the documents submitted by you, it appears that the Talisay-Silay Planters' Cooperative Marketing Association, Inc., is a sugar cooperative marketing association organized under the provisions of Act No. 3425, as amended, and duly registered with the Sugar Quota Administration; that it is organized by persons engaged in the production of sugar and other agricultural products. And from the individual cane purchase agreement entered into by and between the individual planter-members and the cooperative, a copy of which was submitted to this Office, it appears that the member-planters agree to produce and sell to the cooperative and the cooperative agrees to buy the sugar cane produced from the members' sugar cane plantation; that the Cooperative shall have the sugar cane milled into centrifugal sugar; that absolute title to all sugar cane produced from the land of the member pass in favor of the cooperative; and that the member-planters shall be paid their sugar cane within fifteen days from the date of delivery of the sugar cane. As it appears that the 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 48 of Act No. 3425, as amended by Republic Act No. 702. Accordingly, 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 said sugar is exempt from the 2% tax. However, sugar milled from sugar cane belonging to the planter-members of that Cooperative to be milled in behalf of such member-planters is subject to the 2% tax. cdta