Autonomous association of persons voluntarily united to meet common economic and social needs, registered with the Cooperative Development Authority (CDA). Enjoys certain tax exemptions.
A cooperative is a member-owned and member-controlled business designed to serve the economic interests of its members — not primarily to maximize profit for outside investors. In the Philippines, cooperatives are governed by Republic Act 9520 (Philippine Cooperative Code of 2008) and registered with the Cooperative Development Authority (CDA).
Cooperatives enjoy significant tax privileges. Under RA 9520 and BIR rulings, cooperatives that do not transact with non-members and have paid-up capital not exceeding ₱10,000,000 are generally exempt from income tax, VAT, and most local taxes. Larger cooperatives or those transacting with non-members have partial exemptions. These advantages make the cooperative structure attractive for agricultural communities, lending groups, and consumer organizations.
In practice: Farmers in Nueva Ecija form the "Masaganang Ani Multipurpose Cooperative" to collectively sell their rice harvest and access farm inputs at lower prices. By pooling ₱2,000 each from 150 farmer-members, the cooperative has ₱300,000 in capital. The CDA-registered cooperative negotiates better prices with NFA buyers than each farmer could individually, and shares profits back to members as patronage refunds.
Why it matters: For community-based businesses, the cooperative model's tax exemptions can be a significant competitive advantage over traditional for-profit structures. The member-democratic governance (one member, one vote) aligns the business with its users rather than external shareholders.
The cooperative structure requires genuine democratic governance — elections, general assemblies, elected board of directors, annual audit by CDA-accredited auditors. Misuse of the cooperative label to exploit tax exemptions is scrutinized by the BIR.