Have you read the new circular issued by the bureau recently related to the Issuance of Certificate of Tax Exemption (CTE) to Service Cooperatives?
Revenue Memorandum Circular (RMC) No. 18-2017 has issued by the CIR circularizing Memorandum No. 008-2017 dated February 24, 2017 Regarding Issuance of Certificate of Tax Exemption (CTE) to Service Cooperatives.
Attached as Annex "A" of the RMC stated the affected cooperatives of Article 23 of Republic Act (RA) No. 9520 as follows:
The affected cooperatives, however, posit that Article 23 of Republic Act (RA) No. 9520, specifically includes a definition of service cooperative as follows:
Art. 23. Type and Categories of Cooperatives. – Types of Cooperatives - Cooperatives may fall under any of the following types:
(a) xxx xxx xxx
xxx xxx xxx
(e) Service Cooperative is one which engages in medical and dental care, hospitalization, transportation, insurance, housing, labor, electric light and power, communication, professional and other services;
xxx xxx xxx
(u) Other types of cooperatives as may be determined by the Cooperative Development Authority.” Aside from the service cooperatives, other cooperatives not specifically defined under the afore-quoted provision may also be registered as determined by the CDA. Moreover, RA 9520 expressly provides that any doubt in the interpretation and construction of said law should be resolved liberally in favor of the cooperatives, thus:
ART. 142. Interpretation and Construction. – In case of doubt as to the meaning of any provision of his Code or the regulations issued in pursuance thereof, the same shall be resolved liberally in favor of the cooperatives and their members.
It is also stated in the memorandum that service cooperatives must not be totally prohibited from availing of the tax incentives provided under RA 9520 provided that they are duly registered with the CDA and have been issued Certificates of Good Standing to show that they are bona fide cooperatives falling under RA 9520. Provided, however, that these cooperatives will be subject to post audit verification to check on whether they are just being used as a tax shield to avoid or evade payment of taxes.
Please refer: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%2018-2017.pdf of the full text of RMC No. 18-2017 and http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/Annex%20A-RMC%2018-2017.pdf of the full text of Annex "A" Memorandum with regards to Issuance of Certificate of Tax Exemption (CTE) to Service Cooperatives and the guidelines for the registration of the Service Cooperatives.
