Tuesday, June 3, 2014


    Coop stakeholders were unpleasantly surprised, if not shocked, at yesterday's (June 3, 2014) hearing at the Ways and Means Committee of the House of Representatives.

    The Committee was deliberating on the bills proposing amendments to the R.A. 6939 charter of the Cooperative Development Authority (CDA).

    What caused the surprise and apparent dismay among representatives of the cooperative sector was the opposition reportedly expressed by CDA Administrator Eulogio Castillo to the grant of automatic tax exemption to cooperatives, which should come as a matter of course, upon issuance by CDA of the cooperatives' certificate of registration.

    As proposed in the bills, once a cooperative is registered with CDA, all it needs is the certificate of registration, and does not need to secure a number of documents (as is the practice now) and submit these documents separately to CDA, and then later to the Bureau of Internal Revenue, for these cooperatives to enjoy their tax exemption under the current laws.

    What is ironical to the supposed opposition by CDA Administrator Eulogio Castillo, is that the automatic enjoyment of tax exemption, as already provided for in the bills, and have supposedly passed scrutiny in a number of Committees of the House of Representatives.

    This means that many Congressmen, apart from the cooperative sector,  have in fact endorsed and supported the said grant of automatic tax exemption.  CDA Administrator Eulogio Castillo's alleged opposition, thus, comes as some kind of unpleasant surprise, something cooperative leaders do not expect from the said official.

    If these reports were true, and the transcripts of the hearing will bear this out, CDA Administrator Eulogio Castillo's reported opposition is something cooperatives will not be happy about.

    It will be recalled that the onerous requirements alone, imposed by the CDA for a cooperative to secure an annual Certificate of Good Standing (CGS) from the agency, cost money and has been proven to be unaffordable by the majority of registered cooperatives, particularly micro and small cooperatives which comprise some 91% of registered cooperatives, if I get my numbers right.

     As a matter of fact, in a Senate hearing last March 13, 2014, CDA reported that less than half (49%) of over 23,600 CDA-registered cooperatives were able to secure the CGS from CDA.

    In addition to this, and under the current practice, a CGS is one of the documents, among many, in turn required by the Bureau of Internal Revenue (BIR) to be submitted by a cooperative, for the latter to be issued what is called a Certificate of Tax Exemption (CTE) by the BIR.

    If it is any indication of how onerous and unaffordable the costs of these exactions are, BIR reported also during the abovementioned Senate hearing that as of said date, only a little over 27% of CDA-registered cooperatives were able to secure and be issued their CTEs.

    That means that some 73% of CDA-registered cooperative as of that period, technically and actually were disenfranchised of their tax exemption provided by law.

    And for the responsible official of the CDA to have reportedly expressed such opposition, which otherwise would facilitate the cooperatives' automatic enjoyment of their tax exemption, sans the current hassles, appears truly unexpected.

    Anyway, to be fair, by this, we wish to invite CDA Administrator Eulogio Castillo to also present his side on the matter. (END).

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