BIR cites labor-related issue in co-ops’ applications for tax exemptions

MANILA, Aug. 19 (PNA) – The Bureau of Internal Revenue (BIR) is now meticulously screening applications of cooperatives for tax exemptions after noting some labor-related issues.

BIR Commissioner Kim Henares said 18,000 cooperatives around the country have applied for fiscal incentives under Republic Act No. 9520, otherwise known as the Philippine Cooperative Code of 2008, but only 4,000 have been approved.

She pointed out that in the past, the problem was “contractualization of labor” but now the problem became “cooperativizing” of labor which, she pointed out, is a dilemma “because when you cooperatize you self-employ."

"And therefore, those hiring these people are not contributing to their SSS [Social Security System], Pag-IBIG, and Healthcare benefits. We’re seeing a lot of these things happening," she said during the congressional hearing on the agency's budget.

"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," she stressed.

Henares also disclosed that some professionals are organizing themselves into a cooperative in order to claim tax exemptions.

She, however, noted that the General Professional Partnership is only limited to Filipino citizens.

"Therefore, it’s a natural person (and) it cannot be juridical person. We’re thinking, I hope its not taken against the BIR, to put our foot down and say that we will not give tax exemptions to these kinds of cooperatives because you cannot use the law to do immoral against public policy, against the Constitution," she said.

R.A. 9520 promotes the advancement of cooperatives and its members, noting its integral part in poverty alleviation and nation-building.

Data from the Cooperative Development Authority show that there are about 74,000 cooperatives in the country but only 24,000 are active and applying for tax incentives and other perks from the government.

Articles 60, 61 and 144 of R.A. 9520 state that duly registered cooperatives which do not transact any business with non-members or the general public shall not be subject to any taxes and fees imposed under the internal revenue laws and other tax laws.

Also, the law states that cooperatives with accumulated reserves and undivided savings of not more than P10 million will be given tax incentives. It also said that a total of 74,000 cooperatives across the country shall be excluded from paying taxes for five years starting 2010.

"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 thing but it creates a social problems for our labor force," Henares said. (PNA)
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