Sales of Non-agricultural/Agricultural Products to Members and Non-members of Coron (Palawan) Farmers Cooperative Marketing Association

July 25, 1958 BIR RULING NO. 379-58 The Administrator Agricultural Credit & Cooperative Financing Administration 2544 Taft Avenue, Manila S i r : With reference to your 3rd Indorsement dated July 8, 1958 regarding the request of the Coron (Palawan) Farmers Cooperative Marketing Association, Inc. for clarification of the tax exemption granted under the provision of Act 3425 otherwise known as "The Cooperative Marketing Law", I have the honor to inform you that cooperative associations organized under the aforesaid Act are exempt from the payment of the merchant's sales tax, the income tax and percentage tax of whatever nature and description. However, the said exemption covers only those activities authorized under the law. Associations organized under the Cooperative Marketing Law are organized exclusively for marketing the agricultural products produced by their members. They are not authorized to engage in the general merchandising business. If they do so, they become subject to tax on their sale of articles purchased from non-members. In connection with the cases cited in the letter of the Coron (Palawan) Farmers Cooperative Marketing Association, Inc. please be further informed as follows: 1. Sales of non-agricultural products (general merchandise) or even agricultural products bought from non-members are taxable, whether sold to members or non-members. 2. Sales to non-members of agricultural products produced by members of the association are exempt. Sales of fertilizer or feeds to members are also exempt. LLjur Very truly yours, (SGD.) MELECIO R. DOMINGO Acting Commissioner of Internal Revenue