Ilocos Norte Electric Cooperative, Inc.

April 29, 2009 BIR RULING [COOP-(E-004) 291-09] RMC 72-2003; DA-021-2004 Ilocos Norte Electric Cooperative, Inc. Suvo, Dingras, Ilocos Norte 2913 Attention: Atty. Marlon Wayne D. Manuel Counsel Gentlemen : This refers to your letter dated July 1, 2008 requesting for a confirmation that the electric cooperative is exempt from income tax pursuant to Presidential Decree No. 269. ETIHCa It is represented that ILOCOS NORTE ELECTRIC COOPERATIVE, INC. (INEC) with TIN 000-716-369 is a non-stock, non-profit service oriented electric utility and similarly situated as that of other electric cooperatives like Benguet Electric Cooperative, Inc. (BENECO) and that it found that BENECO was issued by this Office BIR Ruling No. DA-125-2007 dated February 23, 2007 stating that exemption from income tax is permanent in nature. In reply, please be informed that Section A (3) and (4) of Revenue Memorandum Circular No. 72-2003 dated October 20, 2003 provides: "A. Electric Cooperatives (ECs) registered with the National Electrification Administration (NEA) are exempt from: xxx xxx xxx 3. Income taxes for which they are directly liable [P.D. No. 269, Sec. 39(a)(1)]; 4. All National Government taxes and fees, including franchise, filing, recordation, license or permit fees or taxes. Provided, however, that the said exemption shall end on December 31 of the thirtieth full calendar year after the date of the cooperative's organization or conversion, or until it shall become completely free of indebtedness incurred by borrowing, whichever event first occurs. Provided further, that the period of exemption for a new cooperative formed by consolidation, as provided in Section 29 of P.D. No. 269, to begin as of the date of the beginning of such period for the constituent consolidating cooperative which was most recently organized or converted under P.D. No. 269 . . . ." Accordingly, this Office confirms your opinion that ILOCOS NORTE ELECTRIC COOPERATIVE, INC. (INEC) is exempt from income tax. INEC is however, subject now to all other national government taxes and fees, including VAT, filing, recordation, license or permit fees or taxes after the thirtieth full calendar year after the date of the cooperative's organization as stated in its registration papers or until it shall become completely free of indebtedness incurred by borrowing, whichever event comes first. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it shall be ascertained that the facts are different, then this ruling shall be considered null and void. EcSaHA Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service