Revenue Memorandum

Circular No. 124-2020

 Requirements for securing
Certificate of Tax Exemption (CTE)
BIR Form No. 1945
New Application:

1. Certified True Copies of the Articles of Cooperation and By-Laws, certified by

CDA;
2. Certified True Copy of the Certificate of Registration issued by CDA, as
certified by CDA;
3. Certified True Copy of the current Certificate of Good Standing issued by the
CDA effective on the date of application;
4. Certified True Copy of the BIR Certificate of Registration of the cooperative;
5. Original copy of Certification under Oath of the List of Cooperative Members
with their TIN, if already available and their capital contributions prepared by
the authorized official of the cooperative.
 Requirements for securing
Certificate of Tax Exemption (CTE)
BIR Form No. 1945
Renewal:

1. Certified True Copies of the Articles of Cooperation and By-Laws,

certified by CDA;
2. Certified True Copy of the Certificate of Registration issued by CDA,
as certified by CDA;
3. Certified True Copy of the current Certificate of Good Standing issued
by the CDA effective on the date of application;
4. Certified True Copy of Latest Financial Statements of the immediately
preceding year duly audited by a BIR- accredited independent CPA
 Obligations of Cooperatives with CTE

1. Communicate any amendment to its Articles of Cooperation

and/or By-Laws to the Revenue District Office (RDO);
2. Submit yearly to RDO the following info:
- certified true copy of Certificate of Good Standing issued by
CDA;
- original copy of certificate under oath by the
chairperson/general manager
 Obligations of Cooperatives with CTE

- the amount of the accumulated reserves as of the yearend

concerned;
- the amount of net surplus for the year; and
- that at least 25% of the net surplus is returned to the
members in the form of interest on share capital and/or
patronage refund
 Obligations of Cooperatives with CTE

3. Original copy of yearly summary of records of transactions clearly

showing which transactions correspond to members; or in case the coop
deals with members and non-members, yearly summary of records of
transactions clearly showing which transactions correspond to members
and non-members; and

4. Original copy of Certification under Oath by the chairperson/general

manager of the List of Active and Inactive Members, their respective TINs,
and the Share Capital contribution of each member as of yearend
concerned.
Upon filing of application for CTE, if some members do not have TIN, will it be
denied by BIR?

• No. It will not be denied by BIR. The application will still be

processed and issued/revalidated.
• Submit List of Members with their full name and capital
contributions
• Within 6 months, the coops shall submit to RDO the TIN of
the members concerned
• Failure to submit the TIN without justifiable reasons shall be
a ground for revocation of CTE.
 Legal Basis of TIN requirement of members of coop

• Based on Section 236 (l) of NIRC of 1997, as amended, and

Revenue Regulations No. 7-2012
How will the coop secure TIN for its active members?

• Coop may collate BIR Form 1904 of each member together

with the photocopy of ID of each member and submit to RDO

• The coop may apply for electronic registration (eREG)

Access together with a Certification under Oath of the List of
Active and Inactive Members and their capital contributions
 Who are considered inactive members?

• Members who are declared not in good standing;

• Members whose whereabouts are not known for the last
continuous period of 6 months;
• Members who do not have transaction or not patronizing any
business of the coop for the continuous period of at least 6
months
• Members who are not participating in the activities of the
coop held within the period of 6 months.
 How does an inactive member revert to
active member?

• When the inactive members transact business, patronize

and/or participate with the activities of the coop; and

• The inactive members’ whereabouts are known

Rule on the exemption of interest earned from savings and time deposit accounts
of members in coop

• Interest income of members deposits in the coop is exempt

from all taxes and fees, including final taxes and
documentary stamp tax.
Rule on the exemption from documentary stamp tax on transactions between coop
and its members

• Exempt from documentary stamp tax.

• Both the coop and the member are exempt.
 Are statutory contributions made by coop as employer excluded from gross
income?

• Yes, coop’s contributions to the following are excluded from

gross income:
- SSS
- PhilHealth
- Pag-IBIG
Exemption from assessment of 1% and 2% creditable withholding tax on isolated
purchases of not more than P10,000 each from non-regular suppliers

• Yes, it is exempt provided the coop is not considered a Top

Withholding Agent
 Priority Cooperatives for Audit/Investigation

• Coops that transact with both members and non-members;

and

• Coops whose accumulated reserves and undivided net

savings is more than Ten Million Pesos (P10,000,000)
 What to do when Assessment is received by coop?
BIR ACTION REQUIRED COOP ACTION PERIOD RESULT
ACTION

Preliminary Response on the Yes, coop will Within 15 days

Assessment Notice factual/legal
(PAN) grounds
No, coop will not Formal Letter of
respond Demand (FLD) /
Final Assessment
Notice (FAN)

FLD / FAN File protest by Yes, coop will Within 30 days

filing a motion for
reconsideration or
reinvestigation No, coop will not Final (F)
respond Executory (E)
Demandable (D)
 What to do when Assessment is received by coop?
BIR ACTION REQUIRED COOP ACTION PERIOD RESULT
ACTION

Final Decision on Appeal to the Yes, coop will Within 30 days

Disputed Court of Tax
Assessment Appeals (CTA);
(FDDA) or;
file a request for No, coop will not F/E/D
reconsideration to
Commissioner of
Internal Revenue
(CIR)

CIR Decision on Appeal to CTA Yes, coop will Within 30 days

Administrative
Protest
No, coop will not F/E/D
Salamat