Transcript RMO 76-2010 - Susan Dajao Tusoy

TAXATION
for COOPERATIVES
Presented by:
Ms. Yesa p. yap
Revenue officer
Rdo 113-west davao
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 RA
o
o
 RA
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6938 Cooperative Code of the Phil.
RMC No. 48-91 dated June 18, 1991.
RR No. 20-2001 dated 11-12-01
9520
RMC 12-2010 dated Feb. 11, 2010
RMC 19-2010 dated March 5, 2010
RMO 76-2010
RMC 81-2010
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a.) Transact business with members only;
b.) Transact business with both members & nonmembers
◦ With accumulated reserves and undivided net
savings of not more than P 10,000,000.00
◦ With accumulated reserves and undivided net
savings of more than P 10,000,000.00
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Shall be exempt from paying any taxes & fees:
◦ Income Tax
◦ Value Added Tax
◦ Percentage Tax
◦ Donor’s tax on donations to duly
accredited charitable research and
educational institutions and reinvestment
to socio-economic projects within the
area of operation of the cooperatives
◦ Excise Tax
◦ Documentary Stamp Tax when the other
party to the taxable document/transaction
who is not exempt shall be the one
directly liable for the tax
◦ Annual Registration Fee of P 500.00
◦ All taxes on transactions with insurance
companies & banks
 20% final tax on interest deposits
 7.5% final income tax on EFCDS.
◦ Electric coop duly registered with the
Authority
I. With accumulated reserves and undivided net
savings of NOT MORE THAN P10 Million
Same exemption from all national internal
revenue taxes for which these cooperatives are liable
as enumerated under Sec. 7 of this Joint Rules &
Regulations.
II. With Accumulated reserves and undivided net
saving of MORE THAN P10 million
Classified again into two:
1. Business transactions with members – exempt from
all National Internal Revenue Taxes for which it is
liable as enumerated in Sec. 7 of this Joint Rules &
Regulations.
Cont….
2. Business transactions with non-members shall
pay the following taxes at the full rate:
o Income Tax
o Value Added Tax (except Sec. 109 par. (L),(M) & (N)
of the NIRC)
o Percentage Tax on all sales of goods/or services
o All other internal revenue taxes unless otherwise
provided by the law.
Taxability/Exemption of Cooperatives
(Transacting w/ members & non-members)
Cont….
Entitled to limited or full deductibility of
donations
Entitled to an exemption on taxes on transactions
with insurance companies and banks
o20% final tax on interest deposits and
o7.5% final tax on interest income derived from
depository bank under the EFCDS.
Sales
by
agricultural
cooperatives
duly
registered with the CDA to their members as
well as sale of their produce, whether in its
original state or processed form, to nonmembers; their importation of direct farm
inputs, machineries and equipment, including
spare parts thereof, to be used directly and
exclusively in the production/or processing of
their produce. (Sec. 109 (L))
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Gross receipts from lending activities by
credit or multi-purpose cooperatives duly
registered with the (CDA. Sec. 109 (M))
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Sales by non-agricultural, non-electric
and non-credit cooperatives duly registered
with the CDA: Provided, That the share capital
contribution of each member does not exceed
P15,000 and regardless of the aggregate
capital and net surplus ratably distributed
among the members. (Sec.109(N))
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MEMBERS
MEMBERS & NON-MEMBERS
ONLY
< 10M
>10M w/
members
>10M w/ Nonmembers
a) Income Tax



Taxable
b) VAT



Generally Taxable but
Exempt on Sec.109 *
* (L,M,N)
c) Percentage Tax



Taxable
d) Donor’s Tax



Limited or full
deductibility
e) Excise Tax



Taxable
f) Documentary Stamp Tax



Taxable
g)Annual Reg. fee (P500)
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


Taxes Exempt
MEMBERS
MEMBERS & NON-MEMBERS
Taxes Exempt
ONLY
< 10M
>10M with
members
>10M with Nonmembers
h) All taxes on transactions
w/ insurance & banks,
including but not limited to
20% & 7.5% final tax




i) Electric coop - VAT on
revenues on systems loss,
distribution, supply,
metering & lifeline subsidy
to their members

Taxable to
non
members

Taxable to non
members

All income of the cooperative not related
to its main/principal business/es shall be
subject to all the appropriate taxes under
the Tax Code. This is applicable to all
types of cooperatives.
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


Capital Gains Tax
Documentary Stamp taxes on dealings
with non-members, except transactions
with banks and insurance companies.
VAT billed on purchases of goods and
services.
Cont….
Withholding tax on compensation / wages,
and creditable and final withholding taxes, if
applicable.

All other taxes directly liable & not otherwise
expressly exempted by any law.

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All members shall be liable to pay all the
necessary internal revenue taxes under NIRC,
except for the following:
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 DST on transactions of members
with the cooperative.
Patronage refund.
 All
cooperatives which were issued a new
certificate by the CDA shall secure their
certificate of tax exemption from BIR within 60
days counted from the date of issuance of
certificate of registration.
Application for tax exemption of cooperatives whose
Accumulated Reserves and Undivided Net Savings
do not exceed 10M shall be acted upon within 45days
upon submission of all the required documents.
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Policies & Guidelines in the
Issuance of Certificate of
Tax Exemption of Cooperatives and
Monitoring thereof
(RMO 76-2010)
General Guidelines

All cooperatives previously registered by
CDA under RA 6938 and 6939 are deemed
registered under RA 9520 and a New
Certificate of Registration shall be issued by
CDA.
General Guidelines

It is only after a cooperative has secured a
new certificate of registration that it becomes
eligible to apply for a Certificate of Tax
Exemption with the BIR.
General Guidelines
• All coops are mandated to update their
registration information with the BIR with
issuance of Certificate of Tax Exemption
 The cooperative's application for Registration
Update may be processed simultaneously
with the cooperative's application for tax
exemption.
General Guidelines



The updated Certificate of Registration shall
be issued and released together with the
Certificate of Tax Exemption.
The RDO shall release the Certificate of Tax
Exemption within 10 working days from
submission of complete documents.
Applications for Certificate of Tax Exemptions
and its subsequent renewals shall comply
with the documentary requirements.
Documentary Requirements for
Application of Tax Exemption
(RMO 76-2010)
A. Original Issuance of Certification of Tax
Exemption
 Duly accomplished Application for
Certificate of Tax Exemption for
Cooperatives (BIR Form no. 1945);
 Certified true copies of the Articles of
Cooperation & By-Laws;
 Certified true copy of the Certification of
Registration issued by CDA under the New
Cooperative Code
Continuation…
 Certified true copy of the current Certificate
of Good Standing effective on date of
application
 Certified true copy of the BIR Certificate of
Registration
 Original copy of Certification under Oath of
the List of Cooperative Members with their
respective TIN and their capital
contributions prepared by authorized
official of the cooperative (certified
photocopy is allowed per RMC 81-2010).
Note:


For the initial submission of the list of
cooperative members, those without TIN may
temporarily use NSO number or other
government issued ID number or Community
Tax Certificate Number.
The cooperative should require all their
members to secure TIN with the BIR for the
updated list of members to be submitted
together with regular filing of the annual
income tax return.
Documentary Requirements for
Application of Tax Exemption
(RMO 76-2010)
B. Renewal of of Certification of Tax
Exemption
 Duly accomplished Application for
Certificate of Tax Exemption for
Cooperatives (BIR Form no. 1945);
 Certified true copies of the latest Articles
of Cooperation & By-Laws;
 Certified true copy of the Certification of
Registration issued by CDA under the New
Cooperative Code
Documentary Requirements for
Application of Tax Exemption
(RMO 76-2010)
B. Renewal of of Certification of Tax
Exemption (cont'n)
 Certified true copy of latest financial
statements of the immediately preceding
year duly audited by BIR accredited CPA.

Shall be valid for the period of 5 years from
the date of issue or date of effectivity

Cooperative is in good standing as
ascertained by the CDA on an annual basis
• Renewed at least 2 months prior to the date
of expiration of the existing Certificate of Tax
Exemption/Ruling.
• Renewal certificate shall be good for another
period of five (5) years.
Monitoring of Cooperative

Cooperatives shall annually file its Annual
Information Return (Form 1702) with the
following documents:
◦ Certified true copy of the current and
effective Certificate of Good Standing from
CDA;
◦ Certified true copy of Certificate under oath
by the chairperson/General Manager
Monitoring of Cooperative
◦ Original copy of yearly summary of records of
transactions clearly showing which
transactions correspond to members, yearly
summary of records of transactions clearly
showing which transactions correspond to
members and non-members
Monitoring of Cooperative
◦ Original copy of certification under oath by
the chairperson/general manager of list of
members, their respective TIN and the share
capital contribution as of the year end
concerned. (certified photocopy is now
allowed under RMC 81-2010)
Certificate under oath


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
The type/category of cooperative and the
principal activities/business transactions it is
engaged in;
That the cooperative is transacting business
with members only or both members and nonmembers;
The amount of accumulated reserves as of the
year end; and
That at least 25% of the net surplus is returned
to the members – interest or patronage refund.
Note

Failure of the cooperatives to comply with the
documentary requirements shall be a ground
for cancellation/revocation of the Certificate
of Tax Exemption.


The books of accounts and there pertinent
records may be examined by the BIR annually
after prior authorization by the CDA within 20
days from receipt of the request from BIR.
1.
For the cases existing prior to the effectivity
date of RA 9520 last March 22, 2009, the
old cooperative code RA 6938 shall apply,
since the new law (RA 9520) did not provide
for the retroactive effect;
1.
For the audit/investigation of 2008 internal
revenue tax returns of Cooperatives,
including tax returns of fiscal period
taxpayers whose taxable year ended before
March 22, 2009, all BIR Offices are
authorized to issue notices of investigation
following
the
procedures
under
the
applicable Audit Program;


All unpaid/unsettled assessments as of the
effectivity of RA 9520 shall be qualified to avail
of the compromise settlement at a compromise
rate equivalent to 20% of the basic tax assessed.
if the financial position of a cooperative
demonstrates a clear inability to pay the
assessed tax, Sec. 204(A)(2) of the NIRC as
amended, shall apply.
end
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