Set of Rules and Regulations Governing the Creation of a Cooperative Association

September 28, 1960 BIR RULING NO. 437-60 Mr. Orlando S. Purugganan Office of the Treasurer Basco, Batanes S i r : I have the honor to acknowledge receipt of your letter requesting for a set of rules and regulations governing the creation of a cooperative association and of the taxes to be paid by said association. In reply, I regret to inform you that this Office cannot grant your request inasmuch as it does not have such set of rules and regulations. It is suggested that your request be addressed to the Securities and Exchange Commission which has jurisdiction over this matter. As regards the taxes that may be due from the cooperative association, I have the honor to quote hereunder the pertinent provisions of Republic Act No. 2023 which read as follows: "SEC. 66. Co-operatives registered under this Act shall, notwithstanding the provisions of existing law to the contrary, enjoy the following exemptions: "(1) Co-operatives with net assets of not more than five hundred thousand pesos shall be exempt from all taxes and government fees of whatever name and nature except those provided for under this Act: Provided , however, That co-operatives having net assets in excess of five hundred thousand pesos shall pay taxes as provided hereunder: "(a) Income Tax they shall pay tax at the full rate as provided under existing laws on the amount allocated for interest on capital; (b) Sales Tax they shall pay fixed and percentage taxes at the full rate as provided under existing laws on gross sales to non-members; and (c) They shall pay all other taxes, unless otherwise provided herein at the full rate as provided under existing laws. "(2) They shall be exempt from the payment of documentary stamp tax, residence taxes, tax on banks and insurance companies and municipal or city taxes." In accordance with the abovequoted provisions of law, cooperative associations registered under Republic Act 2023 with net assets of not more than P500,000.00 are exempt from all taxes and government fees of whatever name and nature. If the net assets of a cooperative association exceed P500,000.00, it shall be subject to all taxes at the full rate provided under existing laws except the documentary stamp tax, residence taxes, tax on banks and insurance companies and municipal or city taxes. casia Very truly yours, MELECIO R. DOMINGO Commissioner of Internal Revenue