REVENUE REGULATIONS NO. 20-2001 issued November 28, 2001 implements Articles 61 and 62 of Republic Act. No. 6938, as amended, otherwise known as the “Cooperative Code of the Philippines” which grants tax exemptions to cooperatives. Duly registered cooperatives dealing/transacting business with members only shall be exempt from paying the following taxes for which they are directly liable: 1) Income Tax on income from operations; 2) Value-Added Tax under Section 109 pars. (r), (s), (t) and (u) of the Tax Code of 1997; 3) 3% Percentage Tax under Section 116 of the Tax Code of 1997; 4) Donor’s Tax on donations to duly accredited charitable, research and educational institutions, and reinvestment to socio-economic projects within the area of operation of the cooperatives; 5) Excise Tax under Title VI of the Tax Code of 1997; 6) Documentary Stamp Tax imposed under Title VII of the Tax Code of 1997, provided, however, that the other party to the taxable document/transaction who is not exempt shall be the one directly liable for the tax; and 7) annual registration fee of P 500.00 under Section 236(B) of the Tax Code of 1997. Duly registered cooperatives dealing/transacting business with both members and non-members with accumulated reserves and undivided net savings of not more than P 10 Million shall be exempt from all national internal revenue taxes for which they are directly liable, as enumerated above. On the other hand, if the accumulated reserves and undivided net savings of the said cooperatives is more than P 10 Million, they shall be exempt from the following taxes: 1) Income Tax for a period of ten (10) years from the date of registration with the CDA, subject to specific conditions; 2) Value-Added Tax; 3) 3% Percentage Tax; and 4) P 500.00 annual registration fee. Said cooperatives are also entitled to limited or full deductibility from the gross income of amount donated to duly accredited charitable, research and educational institutions and reinvestment to socio-economic projects within the area of operation of the cooperative. The tax exemptions of the cooperatives does not extend to their individual members. Thus, members of cooperatives are liable to pay all the necessary taxes under the Tax Code, including the tax on earnings derived from their capital contribution. Provided, however, that interests received by members of cooperatives with accumulated reserves and undivided net savings greater than P 10 Million, after the lapse of the tenyear exemption, shall no longer be taxable in the hands of such members. Notwithstanding the foregoing, all income of the cooperative not related to its main/principal business/es shall be subject to all appropriate taxes under the Tax Code of 1997. This is applicable to all types of cooperatives, whether dealing purely with members or both members and non-members. The taxability of cooperatives to other internal revenue taxes is specified in the Regulations. All cooperatives, regardless of classification, are considered as withholding agents and are required to file Withholding Tax Returns and remit Withholding Taxes on all income payments that are subject to withholding.