Co-ops: We didn’t cause P25-B tax loss

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The 14-million strong Cooperative Development Authority (CDA) has cried foul over claims of the Finance department that the government is losing P25 billion worth of revenues from Value-Added Tax exemption for cooperatives.

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The CDA is a government agency that regulates cooperatives in the Philippines.

CDA Chairman Orlando Ravanera issued the statement on Friday or just a day after the House of
Representatives approved the tax reform bill, which retained the VAT exemption for cooperatives particularly: sales by agricultural cooperatives duly registered with the CDA to their members as well as the sale of their produce, whether in its original state or processed form, to non-members; gross receipts from lending activities by credit or multi-purpose cooperatives duly registered with the CDA; and sales by non-agricultural, non-electric and non-credit cooperatives duly registered with the CDA.

“The judgment made by some government officials against cooperatives was grossly unfair and foul. Cooperatives are job generators and tax makers, and certainly not abusive enterprises nor serve as tax shields,” Ravanera said in the statement.

He noted that the 7.6 million cooperative members, whom the Finance department claims belong to rich cooperatives, really belong to 751 registered cooperatives with members coming from the broad and marginalized basic sectors of society, not the affluent ones or oligarchs.

On the average, the CDA chief said, each of the 4,271 cooperative members only earn a total of P8,102.25 from transactions of bigger cooperatives in one fiscal year.

“Deducting the operational expenses, the salaries and wages of cooperative employees that contribute income taxes, the indirect taxes, employees’ benefits and the 30 percent statutory reserves intended for various purposes such as organizational stability and development, community and social development projects, human capital capacity-building activities, particularly the membership and community-based trainings, at the net, such amount would in actuality become a pittance when it finally reaches the pockets of each member,” Ravanera said.

“Should we then deprive them of a little additional income from their sacrificial pooling of skills, knowledge and resources through long years of self-help and mutual help efforts just because they have built their very own above-average cooperatives by repealing VAT exemption privilege?” he added.

Ravanera called out the Finance department for pushing for a new law mandating the Bureau of Internal Revenue (BIR) to audit all cooperatives even if the existing laws already provide for such.

“The books of accounts and accounting records of the cooperatives can be examined by the BIR. In addition, the CDA is placing these enterprises [under]full scrutiny under the agency’s regulatory activities such as inspection, examination and even investigation,” he said.

“The CDA has also institutionalized the accreditation of Cooperative External Auditors to protect the members and the public from exploitative and irregular acts,” Ravanera added.

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