BIR Ruling No. 169-14

June 5, 2014 BIR RULING NO. 169-14 RA 9520 Subic Bay Multi-Purpose Cooperative Bldg. 670 Subic Bay Freeport Zone Attention: Ranny D. Magno Chairperson Gentlemen : This refers to your letter dated April 13, 2012 requesting for clarification on whether or not the members of your cooperative are exempt from the imposition of final tax on dividend. Documents submitted disclosed that on February 22, 2011, Revenue Region 4-City of San Fernando, Pampanga issued a Certificate of Tax Exemption to Subic Bay Multi-Purpose Cooperative (TIN 001-004-559-000) with No. COOP No. 000162-11RR-04-RDO 19 pursuant to Republic Act (RA) 9520 as a cooperative transacting with both members and non-members with accumulated reserves and undivided net savings of not more than Ten Million Pesos (P10,000,000.00) and is registered with the Cooperative Development Authority (CDA) under Registration Certificate No. 9520-03001673 dated November 4, 2009. In reply, please be informed that pursuant to the Joint Rules and Regulations implementing RA No. 9520, particularly Section 11 as circularized by Revenue Memorandum Circular (RMC) No. 12-10 dated February 5, 2010 SEC. 11. Taxability of Members/Share Holders of Cooperatives. All members of cooperatives shall be liable to pay all the necessary internal revenue taxes under the NIRC, as amended, except for the following: DacASC a) Any tax and fee, including but not limited to final tax on member's deposits or fixed deposits (otherwise known as share capital) with cooperatives, and documentary tax on transactions of members with the cooperative; and b) Patronage Refund which includes all refunds, returns or rebates of the net savings generated from the operation o the cooperative. (emphasis supplied) The above-quoted provision specifically excepted member's deposits or fixed deposits and patronage refund generated from the operation of the cooperative from taxes, thus the dividends in the form of patronage refund received or to be received by members are not subject to the withholding tax. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner Bureau of Internal Revenue