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Why do co-ops have to submit TIN of members?

Posted July 10, 2020

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QUEZON CITY -- When the Republic Act 9520 became law in February 2009, co-operators rejoiced because the Code enforced in Articles 60 & 61 tax exemptions for cooperatives when transacting with members. But the celebrations stopped cold as the realization came that there were many requirements before co-ops could enjoy the exemption.

At a meeting organized by the House Committee on Cooperative Development 

And one of the hardest barriers co-ops must overcome is what is known as the “TIN Requirement”, where co-ops must submit to the Bureau of Internal Revenue (BIR) the list of their members and their Tax Identification Number (TIN).  The problem is co-ops cannot comply with that requirement.  

Why?  

Because 1) some co-ops have thousands of members and it is difficult to ask every member and ask for their TIN (in fact, some co-op leaders suggest the BIR should be the one to know the TINs of those individuals); 2) some members have been inactive for so long and can no longer be reached.  On the part of the co-op, they cannot be delisted because they still have Share Capital in the co-op; 3) some members outrightly do not have a TIN (as in the case of Novaliches Development Cooperative in Quezon City, where only 10% of the members have TIN).

BIR’s Atty. Brianna Delos Santos said: “The burden of proof is on cooperatives . . . to prove that you are dealing with members.  So how can you prove that you are dealing with members?  Since member ninyo, may relationship kayo.  It follows that dapat makuha ninyo yung TIN number niya.  So if you cannot obtain the TIN number of your said members, there is a presumption that that individual is a non-member.  So yun po ang basis ng district office namin.”   ((Since he/she is your member, you are supposed to have a relationship.  It follows that you must get his/her TIN number. . . So that is the basis of our district office.)

Since only the transactions of co-ops with members are tax-exempt, co-ops can and do get taxed.

Rep. Canama: “So ang sinasabi niyo, pag walang TIN ang member, liable ang co-op.  Hindi po sila member namin.  We will be penalized because of that because we are presumed to be dealing with non-members.  Ngayon ko lang narinig yan.  This is debatable.  We will just include this in the TWG discussions.” (So you are saying . . . if an individual member has no TIN, the co-op is liable.  Co-ops will be penalized for that because we are presumed to be dealing with non-members.  That is the first time I heard that.)

And what is sad, according to Rep. Canama, is that “ some co-ops (like NOVADECI) are charged 1,000 for every member without TIN.”

Atty. Elvira Ursal, Secretary of the House Committee on Cooperative Development added: “I asked BIR if the penalty of 1,000 is legitimate for having no TIN.  They said yes, and it is non-registration of a taxpayer.  So the idea is, the small entrepreneur has no TIN, but the moment he joins a co-op, he must have a TIN.  And the co-op will be punished!?”

The BIR officials, Melanie B. Recana, Venus Axalan, Atty. Brianna de los Santos, and Atty. Raymond Lirio were vehement that, yes, the co-ops retained their tax exemptions in 2018 when the TRAIN Law passed into law, and were excluded from repeal in the TRAIN Law but there were conditions between BIR and the CDA/co-op sector.  The compliance of co-ops with the RMO 76-2010, Revenue Memorandum Circular 102-2016 and Joint Administrative Order 1-2019 are the conditions co-ops must comply with.


RMC 102-2016 says it clearest: “The TIN requirement is pursuant to Executive Order No. 98 in 1999, requiring persons whether natural or juridical, dealing with all government agencies and instrumentalities, (including government entities) to incorporate their TIN in all forms, permits, licenses, clearances, official papers and documents which they secure from said government agencies . . .”


Revenue Memorandum Circular 102-2016 was issued on October 24, 2016, clarifying the requirement of Taxpayer Identification Number (TIN) for members of cooperatives applying for Certificate of Tax Exemption (CTE) under Revenue Memorandum Order 76-2919 and Revenue Memorandum Circular 81-2010.

The concerned Revenue District Offices (RDOs) shall allow the processing and issuance/revalidation of CTEs of qualified cooperatives which do not have yet the TIN of members, provided that they submit, in lieu thereof, an original copy of Certification under oath of the list of cooperative members, with their full name and capital contribution.  Cooperatives shall file the application for CTE by submitting duly accomplished BIR Form 1945 (revised October 2016) and other documentary requirements set forth under Section 5 of RMO 76-2010.

RDO cannot deny or put on hold the processing and issuance of the CTE solely on the basis of non-submission of the TIN of cooperative members.  It is clarified, however, that cooperatives which have been granted with CTE are still required to complete and submit to the concerned RDO the required TINs of their members within six months from the issuance of the CTE.  Non-submission by the cooperatives of the members’ TIN requirement within said period is grounds for the revocation of the CTE, in addition to those set forth under Section 8 of RMO 76-2010.

The cooperative, with proper authorization from the members, may apply for the issuance of TIN in behalf of its members, by collating the members’ duly accomplished BIR Form 1904 and valid /government ID, community tax certificate, passport, driver’s license, etc. which show the name, address and birthdate of the person).

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