Request of Paco Credit Cooperative for Exemption from Payment of Internal Revenue Taxes

May 25, 1984 BIR RULING NO. 098-84 24-a-204-83-098-84 Gentlemen : This refers to your letter dated July 18, 1983 requesting exemption from the payment of internal revenue taxes under the provisions of Presidential Decree No. 175. Documentary evidence show that the Paco Credit Cooperative, Inc. is a cooperative duly registered in accordance with Presidential Decree No. 175 under Certificate of Registration No. R-IV-FF-114 dated February 7, 1983. In reply, please be informed that pursuant to Section 5(a) of Presidential Decree No. 175, non-agricultural cooperatives shall be exempt from income taxes and sales taxes for a period of five (5) years reckoned from the date of registration with the Department of Local Government and Community Development (now Ministry of Agriculture). Accordingly, since the Paco Credit Cooperative, Inc. is a duly registered non-agricultural cooperative, the interest income of its bank deposits is exempt from the 15% withholding tax in the case of savings deposit and 20% withholding tax in the case of time deposits and yield from deposit substitutes prescribed by Section 24(cc) of the Tax Code as amended by Presidential Decree No. 1739. Said exemption, however, shall expire on February 7, 1988, or after five years from the date of your registration pursuant to Section 5(a) of P.D. No. 175. This serves as authority of the depository banks to forego withholding of the final tax on the interest income of bank deposits maintained by the Paco Credit Cooperative, Inc. with them. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner