Corporations abusing tax perks of co-ops, senators told

Several senators have expressed their interest in amending the law providing tax incentives to cooperatives to prevent unscrupulous groups from taking advantage of exemptions and benefits granted by the government to legitimate ones.

The possibility of making amendments to the Philippine Cooperative Code of 2007 was raised after a Bureau of Internal Revenue (BIR) official told a Senate committee hearing that she had seen domestic corporations shifting to become cooperatives but still behaving as the former.

“We have seen the behavior of former domestic corporations paying corporate taxes that have shifted and becoming cooperatives when in fact they are competing among regular domestic companies in terms of bidding and getting contracts,” said BIR Assistant Commissioner Marissa Cabreros.

Cabreros also told senators at the recent committee hearing on value-added tax (VAT) exemptions that certain sectors in the cooperative were merely taking advantage of the benefits provided under the law.

Sen. Sonny Angara, chair of the committee on ways and means, said that instead of penalizing all cooperatives by pushing for the lifting of VAT exemptions, the agency must “zero in” on abusive cooperatives.