In its Advisory dated September 12, 2024, the Department of Interior and Local Government (DILG) reiterated its previous Memorandum Circular 2017-16 titled, “Exemption of Duly Registered Cooperatives from Payment of Applicable Taxes, Fees, and Charges and (2) BLGF Memorandum Circular No. 11-001-2016 titled, “Reiterating BLGF Memorandum Circular No. 31- 2009, dated October 7, 2009 Re: Exemption of Cooperatives from the Payment of Local Taxes Fees and Charges.
Said advisory serves as a reminder to the Local Chief Executives and all others concerned to strictly observe the above mentioned policies and to effect the exemption of cooperatives from payment of taxes, fees, or charges. Likewise, all DILG Regional Directors are directed to cause the widest dissemination of the Advisory within their respective area of jurisdiction.
The underlying legal basis for exempting cooperatives is clearly enshrined under Article XII of the 1987 Constitution, on National Economy and Patrimony, specifically Sections 1, 6, and 15, to wit:
SECTION 1. The goals of the national economy are a more equitable distribution of opportunities, income, and wealth; a sustained increase in the amount of goods and services produced by the nation for the benefit of the people; and an expanding productivity as the key to raising the quality of life for all, especially the underprivileged.
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In the pursuit of these goals, all sectors of the economy and all regions of the country shall be given optimum opportunity to develop. Private enterprises, including corporations, cooperatives, and similar collective organizations, shall be encouraged to broaden the base of their ownership.
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SECTION 6. The use of property bears a social function, and all economic agents shall contribute to the common good. Individuals and private groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own, establish, and operate economic enterprises, subject to the duty of the State to promote distributive justice and to intervene when the common good so demands.
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SECTION 15. The Congress shall create an agency to promote the viability and growth of cooperatives as instruments for social justice and economic development.
Hence, in pursuance of the above constitutional mandate, the Republic Act (RA) No. 6938 which was amended by RA 9520 providing the rights and privileges of cooperatives including among others tax exemption. This law was enacted to foster the creation and growth of cooperatives as a practical vehicle for promoting self-reliance and harnessing people’s power towards the attainment of economic development and social justice. Notably, the Local Government Code also provides under Section 133(n) that the taxing power of local government units shall not extend to the levy of taxes, fees, or charges on duly registered cooperatives under the Cooperative Code.
Thus, the exemption afforded to duly registered cooperatives from payment of applicable Taxes, Fees, and Charges is in recognition to the cooperatives’ far reaching social and economic benefits and their potential as a dynamic people centered enterprise committed to total human development.
Download ADVISORY Exemption of Duly Registered Cooperatives on Taxes, Fees, and Charges HERE
