CDA against repealing of tax exemption of coops
THE Cooperative Development Authority (CDA) is not in favor with the repealing of the tax exemption for cooperatives as this will remove the distinction of cooperatives from corporations and partnerships, a CDA official said.
Articles 60 and 61 of Republic Act 9520, also known as Philippine Cooperative Code of 2008, state the tax exemption and tax treatment of cooperatives specifically saying “cooperatives transacting business with both members and non-members shall not be subjected to tax on their transactions with members. In relation to this, the transactions of members with the cooperative shall not be subject to any taxes and fees, including but not limited to final taxes on members’ deposits and documentary tax.”
During the Kapehan sa Dabaw weekly forum at SM City yesterday, CDA Cooperative Project Development and Assistance Section Head Tony Escobar said this tax exemption is one of the major distinction that differs cooperatives from other business entities such as corporations and partnerships.
“Although we appreciate the fiscal strategy of our government, particularly the proposed bill but including the repeal of the very articles which are the basis of our tax exemption privilege of our cooperatives may be counter to the social justice that this being accorded to cooperatives. These are the basis for the privilege of the coops like the national taxes and the local taxes. If we repeal that, there will be no more difference for corporation and cooperation,” said Escobar.
This is in relation to House Bill 4774,filed by Representative Dakila Carlo E. Cua, particularly Section 34b which specifies repeal of articles 60 and 61 of RA 9520.
Escobar added cooperatives are producers of taxpayers since the members, who are also employees of the jobs generated, pay their taxes already.
“Because of these coops, we generate employment. We do not have to go to the government to provide employment to the members because the coops themselves provide
employment and in turn, they also give income to these members. While they have the income, they are also being assessed of tax. That is why, the number one producers of tax payers are cooperatives. We helped them convert to business their needs while addressing it, we also helped the government collect taxes since the members are already income-earners,” he said.
This repeal of tax exemption would greatly affect those belonging under the micro, small enterprises which make up the 80 percent of the total number of cooperatives in the country. He said these enterprises may not anymore afford additional taxes to be shouldered.
Escobar also clarified that it is also part of RA 9520 that once the cooperative reached the large enterprise category, or those with assets of more than P100 million, will already be removed from the cooperative tax exemption privilege.
“The tax exemption privilege has a ceiling. If the accumulated mandatory reserve funds reach more than P10 million, the cooperative may no longer be tax-exempted as to their transactions with nonmembers,” Escobar said.