Wednesday, October 26, 2016


Co-ops’ tax exemptions 

at risk with new TIN rule



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Posted on October 27, 2016

TAX-EXEMPT status will be revoked from cooperatives that fail to submit the tax identification numbers (TINs) of their members, the Bureau of Internal Revenue (BIR) said in a memorandum circular.



Revenue Memorandum Circular (RMO) 102-2016, signed by Commissioner Caesar R. Dulay, added noncompliance with the TIN requirement of a cooperative are grounds for revocation of its certificate of tax exemption (CTE).

Cooperatives with CTEs are exempt from paying income tax, percentage tax, donor’s tax, excise tax, documentary tax, and the annual cooperative registration fee.

This could be revoked if a cooperative fails to furnish the BIR with the TINs of all its members within a six-month period starting this week.

To facilitate compliance for cooperatives with unregistered cooperative members, the RMC allows for cooperatives to apply for the TIN issuance of its members as long as the proper authorization and documentary requirements are presented to the bureau.

Because of the implementation of RMC 93-2016, these documentary requirements for the issuance of TIN for jobless individuals have been reduced to a photocopy of any government authorized identification that shows the person’s name, address and birthdate.

In an e-mail interview, Lina P. Figueroa, principal of the Tax Advisory and Compliance division of Punongbayan & Araullo, said that while unregistered potential taxpayers would benefit from this measure, the penalty imposed is harsh. 

“Though there are members who may be really poor, there are also taxpayers and potential taxpayers among them,” Ms. Figueroa said. “They would be easier to monitor if they registered and accounted for. It would also supplement tax statistics. “ 

However, “withdrawal of the exemption of the coop should not be the consequence,” she said.

According to latest data from the Cooperative Development Authority, approximately three thousand cooperatives currently enjoy these tax exemptions. -- Lucia Edna P. de Guzman

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