InterAksyon - BIR impositions on tax-exempt cooperatives bordering on harassment - Bongbong

29 December 2013

By Ernie Reyes | InterAksyon

InterAksyon-TV5MANILA, Philippines – Senator Ferdinand “Bongbong” Marcos on Sunday criticized Internal Revenue Commissioner Kim Jacinto-Henares for “harassing” cooperatives by imposing unreasonable requirements before they can enjoy tax-exempt status.

“We have been around the country and 80 percent of our discussions are complaints from different cooperatives saying why is the BIR harassing us when we are by law already tax-exempt?” Marcos said during the hearing on the proposed amendments to the Cooperative Development Authority (CDA) charter.

He noted that while the law very clearly states that cooperatives registered with the CDA are tax-exempt, the BIR still requires them to submit various documents to prove they should be exempted from the payment of taxes.

“Do you realize the chaos that such policy has caused?” Marcos told officials of the Department of Finance who attended the hearing.

Marcos said the BIR policy is counter-productive to the idea of promoting cooperativism in the country, as it prevents many cooperatives from enjoying their tax exemption and eventually causes them to fail. “And I say that it is unreasonable because it is almost impossible for most of the cooperatives to comply with those new requirements,” he added.

DOF officials insisted that the BIR requirement is justified because some CDA-registered cooperatives may engage in activities not for the direct benefit of their members and for which they should be taxed.

Marcos shot back that the CDA exists precisely to monitor the activities of cooperatives, to find out if they are complying with the law and revoke their accreditation if they do not. Therefore, cooperatives that CDA allows to register or to renew their registration should enjoy the presumption that they are not abusing their tax-exempt status.

What makes matter worse, according to Marcos, is that unlike the CDA, which sends its people to monitor cooperatives, the BIR requires cooperatives to go to their BIR office and submit the required papers.

“First of all, as a procedural matter, that is incorrect, because that assessment has already been made (by the CDA). As a practical matter, it does not work because it is far too much to ask the cooperatives to make that kind of presentation to the BIR,” Marcos stressed.

In the current 16th Congress, Marcos has filed Senate Bill 424, or “An Act Reorganizing the Cooperative Development Authority, Repealing for the Purpose Republic Act No. 6939, Creating the Cooperative Development Authority.”