Audit program for cooperatives

(Revenue Memorandum Order No. 07-2020, February 18, 2020)

This Tax Alert is issued to inform all concerned on the audit to be conducted by the Bureau of Internal Revenue (BIR) on cooperatives.

Pursuant to the TRAIN Law, the BIR is no longer required to secure authorization from the Cooperative Development Authority (CDA) before the examination of the books of accounts and other accounting records of a cooperative.

Under RMO 07-2020, the BIR shall issue Electronic Letters of Authority (eLAs) for the audit of cooperatives for taxable year 2018 and onwards. The following cooperatives shall be prioritized for audit:

  1. Cooperatives which transact business with both members and non-members whose accumulated reserves and undivided net savings is more than P10,000,000; and
  2. Cooperatives with income not related to their principal business under their Articles of Cooperation.

The audits are intended to ensure the correctness of availment of the tax exemptions/incentives and to effectively monitor the tax compliance of cooperatives.