BIR explains coops’ tax exemption

Thursday, June 16, 2011

THE Bureau of Internal Revenue (BIR) has clarified provisions of the joint implementing rules and regulations (IRR) on the application for tax exemption of cooperatives under Republic Act 9520 or the Cooperative Code of 2009.

BIR Operations Group deputy commissioner Nelson Aspe issued the memorandum addressed to regional directors and revenue district officers dated June 9, 2011 after receiving complaints from some cooperatives on the processing of their applications for tax exemption.

The complaints, he noted, were specifically on the alleged misinterpretation of some of the revenue officials on the provisions of Section 13 of the joint IRR with regard the reckoning date of application.

The provisions stated that "all duly-registered cooperatives under RA 9520 shall apply for a certificate of tax exemption (CTE) within 60 days counted from the date of the issuance of the certificate of registration by the Cooperative Development Authority (CDA).”

To apply these provisos, Aspe said revenue officials should take into account the effectivity dates of RA 9520, which was approved on Feb. 17, 2009 but took effect April 6 that year; and the joint IRR issued on Feb. 5, 2010 with June 16, 2010 as effectivity date.

"This shows that while the joint IRR became effective on June 16, 2010, RA 9520 has already been effective since April 6, 2009,” he added, noting that there were already a lot of cooperatives which registered with the CDA even without the IRR at that time.

"For cooperatives that have registered and applied with the BIR for the CTE before the effectivity of the joint IRR, the quoted provision should not apply," Aspe stressed.

"In this case, their applications must be processed, subject to certain documentary requirements, with no issue as to the number of days they have applied after their CDA registration."

If the CDA registration was dated from April 6, 2009 to June 15, 2010, the date of CTE application should be on or before August 15, 2010 while those issued June 16, 2010 onwards have within 60 days from date of registration to apply for a tax exemption.
"For CTE applications beyond the periods stated above, the provisions of Section 13 of the joint IRR shall be applied, Aspe ruled.

This means that late applicants shall be subjected to internal revenue taxes prior to the issuance of the CTE.

"However, they can apply for tax credit/refund of taxes previously paid from the date of registration with the CDA up to the issuance of the CTE, subject to the rules and procedures for processing tax credit/refund," the IRR added.

http://www.sunstar.com.ph/bacolod/business/2011/06/16/bir-explains-coops-tax-exemption-161423