Tax Digest
Volume 10,
Series 60
Deputy Commissioner seeks guidance from the CIR for Malicious Service Cooperatives

The Deputy Commissioner Jesus Clint O. Aranas of the Legal Group, wrote a memo to the Commissioner of Internal Revenue (CIR), seeking his guidance on the matter of issuance Certificate of Tax Exemption (CTE) to services cooperatives which are not specifically identified under Republic Act (RA) No. 9520 such as labor contracting, professionals, construction, mining and other cooperatives similarly established. The Deputy Commissioner seeks to stop issuing CTE to persons that is using cooperatives as tax shield which could be considered as fraudulently registered, which is a ground for cancellation and revocation of Certificate of Registration.

It is not to the goal of the Deputy Commissioner to put restrain on service cooperatives in availing tax incentives but to ensure the protection of the government from malicious intention. So long as that the concern cooperative have been duly registered with the CDA; have been issued Certificates of Good Standing; and having been subjected to post audit verification to check the core intention of establishing the cooperative, there will be problem arising from availing their tax incentives.

Revenue Memorandum Circular No. 18-2017
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