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Taxation Updates For Coops - 0
Taxation Updates For Coops - 0
COOPERATIVES
Dean Estelita C. Aguirre
Resource Person
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Presentation Outline
Part I Review
1) Legal Bases of Exemptions
2) Classification of Coops
3) Tax Exemption/taxability of Coops
4) Taxability of COOP Members & Directors
Part II Recent Development
1) CTA Decisions: Final Tax on Interest
2) RMC 34-2008 on Directors fees
3) RR14-2007 on Microfinancing
3) BIR ruling on CTE
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Classification of Coops
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COOPs
COOPs
Electric COOPs
2. NON-VAT Taxpayers
Other COOPs
2.2 Percentage taxpayers
2.3 Exempt taxpayers (from VAT/%Tax)
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Exemption of COOPs
depends on whether
it deals w/ members only,regardless of reserves
it deals w/ members and nonmembers,
with P10M Reserve funds or less
it deals w/ members and nonmembers,
with over P10M Reserve Funds
it is still within 10-year period
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Electric Cooperatives
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Electric Cooperative
Income Tax :
NEA-registered - Exempt w/in 30 years
CDA-registered dealing w/ members Exempt
dealing w/ non-members Exempt w/in
10 years on business with non-members
Value-Added Tax :
NEA and CDA registered - Subject to 12 %
(BIR Ruling DA-384-2005 dated September 7, 2005)
(BIR Ruling DA-108-2006 dated March 14, 2006
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Credit/Multi-Purpose Cooperatives
Section 109 (M)
Exempt from VAT
Conditions: 1. duly registered with CDA
2. in good standing with CDA
Lending Activities
. . .you are exempt from VAT under Sec 109 (t)
of the Tax Code of 1997, as amended by
R.A. 9337 on your gross receipts from lending
activities to your members but NOT from those
activities involving non-members. . . .
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Non-elec,non-agri,non-credit COOPs
Section 109 (N)
Exempt from VAT
Conditions: 1. duly registered with CDA
2. in good standing with CDA
3. share capital contribution
of each member does not
exceed P15,000.
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TAXABILITY
of
Members and Directors
of
COOPERATIVES
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Members of Cooperatives
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NS Distribution: RA 6938
Reserve Fund at least
10%
10%
Interest/Patronage refunds
70%
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65%
5%
Interest/Patronage refunds
25%
(the remaining net surplus but not less than 25%)
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Interest on deposits
Not subject to withholding.
Include in other taxable income in
the income tax return.
Subject to income tax under Section
24(A) of the NIRC
(BIR Ruling DA-591-2006 dated October 5, 2006)
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Recent Development
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Directors Fees
If the director is an employee of the
coop: considered as compensation income
If the director is not an employee of
the coop: treated as professional income
subject to creditable withholding tax.
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Micro-Finance, RR 14-2007
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Micro-Finance, RR 14-2007
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Financial Statements
(RR 7-2007)
FS shall include:
1. Balance sheet
2. Income Statement
3. Statement of Changes in Equity
4. Statement of Cash Flows
5. Notes, comprising a summary of significant
accounting policies and other explanatory
notes
6. Schedules attached to the afore-cited statements
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On Books of Accounts
(RR 8-2007)
Mandates taxpayers to maintain books and
records that would reflect the reconciling items
between Financial Statement figures and/or
data with those reflected in the filed ITR.
(PFRS vs. NIRC)
(RR 8-2007, effective TY 2007)
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End of
presentation
estelitaaguirre@yahoo.com
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