THE Bureau of Internal Revenue (BIR) has assured Congress that applications for tax exemptions filed by cooperatives are being processed in earnest but not at the expense of allowing unscrupulous groups to avail of exemptions at the expense of labor and government.
Internal Revenue Commissioner Kim Henares stressed the agency has to be more discerning in granting tax exemptions to cooperatives, saying some groups apply for such exemptions in the guise of a cooperative merely to evade paying the right taxes..
She said the agency has so far processed and granted around 4,000 certificates of tax exemption (CTE) out of some 18,000 applications.
“I’m assuring you that we will be looking into the status of the application and where it is now and the implementation of the law,” Henares said, adding the approval of the CTE has been devolved to the regional offices of the BIR.
Henares singled out some groups, which she did not identify, who are taking advantage of the cooperative law to evade paying the right taxes to the government.
“They are shifting toward ‘cooperativizing’ their labor. These cooperatives in turn were short changing the labor because when you ‘cooperatize’ you self-employ. And therefore, those hiring these people are not contributing to their SSS [Social Security System], PagIbig, and health-care benefits. We’re seeing a lot of these things happening,” Henares said.
Further, the BIR chief said some professionals are also organizing themselves into cooperatives to avail of tax exemptions. General professional partnership, however, is only limited to Filipino citizens.
“I hope it’s not taken against the BIR to put our foot down and say that we will not give tax exemptions to these kind of cooperatives because you cannot use the law to do immoral things, against public policy, against the constitution,” Henares said.
“I support the cooperative movement but it should be done for the right purpose and not for these types of purpose that would disadvantage the labor force. Otherwise, it is not only a tax erosion but it also creates a social problem for our labor force,” she said.
A cooperative group is defined as an autonomous association with a common bond of interest, who voluntarily join together to achieve their social, economic, and cultural needs and aspirations by making equitable contributions to the capital required, patronizing their products and services and accepting a fair share of risks and benefits.
Republic Act 9520, or the Philippine Cooperative Code, authored by resigned Sen. Miguel Zubiri, aims to advance the interest of cooperatives and its members.
