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  • Why do co-ops have to submit TIN of members? (Part 2)

Why do co-ops have to submit TIN of members? (Part 2)

Posted July 24, 2020

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At a Tax Technical Working Group (TWG) online meeting discussing co-op tax exemptions held last July 15, COOP-NATCCO Partylist Rep. Ben Canama said that “the TIN requirement on co-ops has been one of the reasons why co-ops “cannot appreciate very much the tax exemptions as contained in the Cooperative Code.”

To obtain a Certificate of Tax Exemption (CTE), a co-op must submit to the Bureau of Internal Revenue: 1) the names of their members, 2) their corresponding Share Capital in the co-op, and 3) the member’s Tax Identification Number (TIN).

Bureau of Internal Revenue (BIR) officials at the TWG discussions revealed BIR had issued Certificate of Tax Exemption (CTEs) to 7,575 co-ops as of December 31, 2019.  The CDA has 27,000 co-ops registered, but only some 18,000 are “active.” 

Since the meeting in H.O.R. last November 4, 2019, co-op leaders have complained about the TIN requirement because 1) some members are illiterate, too poor, or too old, 2) some members cannot be contacted and are presumed to be either dead or abroad, 3) it is impractical (especially for co-ops with thousands or even hundreds of members) to approach every member to ask them for their TIN, 4) some members simply won’t get a TIN.

The bottleneck, obviously, is the TIN requirement.

This problem has serious consequences for many co-ops – they could be assessed to pay tax.

At the TWG meeting, the BIR officials clarified that Article 60 and 61 of the Cooperative Code says “co-ops transacting with members are, indeed, tax-exempt.    But co-op members are not tax exempt.”

A BIR official even implied that “co-ops keep saying they improve the lives of their members and lift them out of poverty.  When your members are out of poverty, then their TIN makes that person ready to pay tax.”

Another flash point in the TWG meetings was why co-ops were made to pay Documentary Stamp Tax.  

That will be revealed in a future article in this website.

Keep posted in www.natcco.coop and find out more.

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