The BIR Chief is serious!

Bureau of Internal Revenue (BIR) Chief Cesar Dulay reminded all Internal Revenue Officers that coop members’ interest on deposits and share capital are exempt from tax.

The BIR issued on December 14 Revenue Memorandum Circular No. 121-2021 on the subject: “Clarifying the Taxability of the Interest Paid by Cooperatives to its Member’s Deposit or Fixed Deposits Otherwise Known as Share Capital.”

The Memorandum was directed to “All Internal Revenue Officers, Employees and Others Concerned.”

The memo defined ‘member’s deposits’ as “savings and time deposits of both regular and associate members while share capital refers to member’s paid up capital.”

The Memo also referred to RMC 12-10 on the implementation of Articles 60, 61, and 144 of the 2008 Cooperative Code.

And based on the RMC, “members of the cooperative are not liable to pay any tax and fee on the interest earned on member’s deposits and fixed deposits (share capital). Hence, cooperatives are not liable to withhold tax on the aforesaid interest payments to members.”

This memo is a result of the frequent engagement of the Co-op Natcco Party List, Philippine Cooperative Center (PCC), National Coopertive Development Council (NCDC),  and League of Cooperative Development Officers of the Philippines (LCDOP), for a very productive policy engagement with BIR regarding our assertion on the non- taxability of interest on deposits, share capital and more. 

The said entities submitted a position paper and continuously engages in talks with BIR officials.

To avail of tax exemptions, cooperatives are still required to obtain a Certificate of Tax Exemption (CTE) from the BIR.

Photo downloaded from Facebook Account Sec Caesar Dulay.  Photo by Enrique Agcaoili of The Manila Times