Interest Income of Cooperatives from Bank Depositors are Subject to 20% Final Withholding Tax

June 26, 1991 BIR RULING NO. 126-91 24 (e) (1) 000-00 126-91 Gentlemen : This refers to your letter dated September 26, 1990 which was referred to this Office by the Cooperative Development Authority (CDA) relative to your request for exemption of your interest income on bank deposits from withholding tax on ground that you are a duly registered cooperative. In reply, please be informed that your aforesaid request can not be granted for lack of legal basis. The interest income of cooperatives from bank depositors are subject to the 20% final withholding tax under Section 24 (e) (1) of the Tax Code, as amended, notwithstanding the provisions of Articles 61 and 62 of R.A. No. 6938 otherwise known as the Cooperative Code of the Philippines. This is so, because the exemption granted to cooperatives by the Cooperative Code does not apply to taxes on income not arising from cooperative productive activity such as interest on bank deposits, among others. cdtech Very truly yours, (SGD.) JOSE U. ONG Commissioner