Co-ops urge gov’t to define their tax obligations

The Country’s Union of Cooperatives has turned to the department of Finance and its attached agency, the Bureau of Internal Revenue, for help in clearing up the tax obligations slapped on member organizations nationwide.

Also, the 22,000-accredited cooperatives grouped under the Philippine Cooperative Center (PCC) have submitted to the DOF and BIR a 100-page primer outlining the tax exemptions and compliance of cooperatives.

According to PCC chair Senen Bacani, the cooperatives group deemed it necessary to issue the primer citing the difficulty some of the members are having in dealing with tax collectors, who appear to have different interpretations of the tax code on cooperatives.

The PCC is hoping that the primer will meet the approval of the DOF and BIR and adopt it “for the uniform guidance of all cooperatives and tax collecting agents,” Bacani said in an interview.

Lecira Juarez, Cooperative Development Authority Chair, said that, despite the clear exemptions of cooperatives from taxes, many cooperatives are still swamped with deficiency tax assessment from the Bureau of Internal Revenue.

“Should these cooperatives be made liable for taxes, even if the exemption is clearly provided in the law?” Juarez asked.

To encourage their formation, cooperatives were granted incentives under the Cooperative Code. The incentive depends on whether the cooperative does business exclusively with members or deals with non-members.

Tax expert Recel P. Cachuela from the Punongbayan-Araullo audit firm, said that “if the cooperatives are to be considered vehicles for promoting self-reliance aimed towards the attainment of economic development and social justice, [the organization] should be accorded benefits clearly intended by law.”

Note: The above article is an excerpt from Philippine Daily Inquirer (PDI) dated October 30, 2006. By Christine A. Gaylican.