The study provided basic information on the Philippine cooperatives industry, the tax incentives available to them, and a comparison with the Association of Southeast Asian Nations (ASEAN) member-countries. The importance of cooperatives has been highlighted amidst the pandemic as they were able to widen sources of credit and provide other assistance to their members and non-members. In the Philippines, the tax incentives available to cooperatives are provided by Republic Act No. 9520, otherwise known as the “Philippine Cooperative Code of 2008”.
Cooperatives are expressly exempt from income tax in the Philippines, Brunei Darussalam, and Singapore, but they are subject to income tax in Indonesia, Malaysia, Myanmar, and Vietnam. Like the Philippines, certain transactions of cooperatives are exempt from the documentary stamp tax/stamp duty in Thailand and Singapore. In terms of the imposition of business tax, savings cooperatives in Thailand, with respect only to loans provided to their members or another savings cooperative, are exempt from the special business tax. In contrast, cooperatives in Myanmar may be exempted from commercial tax subject to certain conditions. In Indonesia, dividends paid by a domestic corporate taxpayer to a resident cooperative are subject to a 15% withholding tax. In Singapore, dividends paid by cooperatives are subject to income tax.
Compared to its ASEAN neighbors, the cooperatives industry in the Philippines enjoys various tax exemptions, with the objective that the favorable fiscal incentive policies accorded to them will further translate into strong and wider delivery of support services to the marginalized sectors of the economy.