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MANILA – Senator Sherwin Gatchalian is calling for the suspension and review of a Bureau of Internal Revenue (BIR) rule requiring all cooperative members to obtain taxpayer identification numbers (TINs) before their cooperatives can qualify for tax exemptions.
During the Senate Ways and Means Committee hearing on Thursday, Gatchalian argued that the rule, implemented under Revenue Memorandum Circulars (RMC) Nos. 76-2010 and 124-2020, contradicts the Philippine Cooperative Code of 2008 (Republic Act 9520) and imposes unnecessary compliance burdens on cooperatives, especially those composed of informal workers.
“The BIR’s requirement creates confusion and makes it impractical for small cooperatives to comply. We need immediate action, not just a review,” Gatchalian said.
He said RA 9520 grants tax exemptions to cooperatives registered with the Cooperative Development Authority (CDA), provided they obtain a certificate of tax exemption (CTE) from the BIR.
However, the BIR’s circulars require all cooperative members to have TINs, a requirement not imposed on other tax-exempt entities.
Gatchalian raised concerns over technical issues, noting that BIR’s Online Registration and Update System (ORUS) frequently experiences downtime and accessibility problems, making it difficult for cooperative members to secure TINs.
He also cited inconsistencies in the implementation of the rule across various Revenue District Offices (RDOs), which has led to confusion and compliance challenges for cooperatives.
He also warned that requiring all members to obtain TINs could violate the Data Privacy Act, as tax filings should only require the cooperative’s TIN.
Gatchalian said many cooperative members earn below the taxable income threshold of PHP250,000 annually, making the TIN requirement unnecessary.
He said the rule is particularly impractical for small cooperatives, especially those in the informal sector, as it adds bureaucratic obstacles that hinder their operations.
To address these concerns, Gatchalian filed Senate Resolution No. 1286, directing the committee to assess whether the BIR’s policy violates the tax exemption privileges granted to cooperatives.
He also raised the possibility of amending RA 9520 to clarify the scope of cooperative tax exemptions and prevent conflicting interpretations.
Among the proposed reforms, he suggested standardizing compliance procedures across RDOs to prevent inconsistent enforcement and improving ORUS accessibility to streamline the TIN application process for cooperative members.
He also called for aligning cooperative tax exemption policies with the National Internal Revenue Code (NIRC) to eliminate unnecessary regulatory burdens.
Gatchalian cited the urgency of action, warning that continued enforcement of the rule would hinder cooperative operations and create unnecessary bureaucratic obstacles.
“There is chaos on the ground because of this rule. A review is not enough — we need concrete action to protect cooperatives,” he said.
A follow-up Senate hearing is expected in the coming weeks to further assess solutions and determine other possible legislative amendments. — Wilnard Bacelonia (PNA)
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Credit belongs to: www.pna.gov.ph
