Co-ops to file “Request for Ruling” on Doc Stamps
Article 61 of the Cooperative Code says co-ops are exempt from Documentary Stamp Tax (DST). So why are DST’s required when co-ops transact with members or other entities? At the TWG discussions on July 21, some co-ops complained to the Bureau of Internal Revenue (BIR) that they were being made to pay for DST for transacting with members.
BIR’s Atty. Jovilyn Marquez clarified that: “Co-ops are exempt from documentary stamp tax. All coops transacting with members are definitely exempt as per the Cooperative Code of 2008 (RA 9520) and its Joint Rules & Regulations of 2010.
Under the TRAIN Law, official documents require documentary stamps. These include Issuance and Transfer of Shares, Certificates of Profits, Bills of Echange, Life Insurance Policies, Annuities and Pre-Need Plans, Leases and Hiring Agreements, Powers of Attorney, all Debt Instruments, and now, even Deeds of Donation of Real Property.
So why are co-op transactions still being required Documentary Stamps?
The BIR officials replied that RA 9520 Article 61 exempts co-ops from DST, but NOT the entity (in this case the member) that the co-op is transacting with. The DST is to be shouldered by the entity that the co-op is transacting with.
BIR said the tax exemption granted to co-ops does not extend to members.
Marquez cited RMO 76-2010 Section 7 f: “Duly registered cooperatives dealing/transacting business with members only shall be exempt from paying any taxes and fees, including but not limited to . . .
Documentary Stamp Tax imposed under Title VII of the National Internal Revenue Code as amended, provided however, that the other party to the taxable document/transaction who is not exempt SHALL BE THE ONE DIRECTLY LIABLE FOR THE TAX.”
BIR also cited Joint Rules & Regulations on Art 60 & 61 of RA 9520 in relation to RA 8424 (NIRC) Section 10 on Taxability of Coops to Other Taxes – “All cooperatives, regardless of classification shall be subject to Documentary Stamp Taxes on transactions of cooperatives dealing with non-members, except transactions with banks and insurance companies, provided that whenever one party to the taxable document enjoys the exemption from DST, the other party who is not exempt shall be the one directly liable for the tax.”
However, the co-op leaders insisted that RA 9520 Article 61 says: “Co-ops transacting business with both members and non-members shall not be subject to tax on their transactions with members. In relation to this, the transactions of members with the cooperative shall NOT be subject to any taxes and fees, including but not limited to final taxes on members’ deposits and documentary tax.”
The point is, the transaction itself, and not just the co-operative or the member, is tax exempt.
Another co-op leader complained that they were charged DST when dealing with the Land Bank.
BIR suggested that co-ops participating in the TWG discussions file a “Request for Ruling” with the BIR’s Legislative Division on the DST issue.
Rep. Canama mentioned that said co-ops will file the “Request for Ruling” on behalf of all cooperatives nationwide.
BIR’s Atty Brianna de los Santos at the July 21 TWG meeting said the BIR will issue a ruling on this.