THE Department of Finance (DOF) has ordered the Bureau of Internal Revenue (BIR) to step up its ongoing audit of registered cooperatives in the country to weed out tax-incentive abusers.
In a report, the BIR said that it has sent audit notices to 474 cooperatives across the country resulting in tax assessments amounting to P1.62 billion, from which the agency has so far collected P250.35 million.
According to BIR Deputy Commissioner Arnel Guballa, the BIR has a record of 29,623 registered cooperatives whose tax compliance amounted to P3 billion combined in 2017, but declined by 5.4 percent to P2.84 billion in 2018.
Finance Secretary Carlos Do-minguez III ordered the BIR to intensify its efforts in determining which cooperatives “are true to their mandate of promoting self-reliance and social change, and which ones have apparently organized themselves into cooperatives as a ruse to exploit the tax benefits granted to such organizations.”
“You have the right to audit already, so please exercise it,” Dominguez said.
Guballa said that the ongoing audit uncovered enterprises with business models that are not cooperatives, but claim to be one so that they can enjoy tax perks.
He also said that the BIR has discovered a “cooperative” that owns several gasoline filling stations.
Under the Tax Reform for Acceleration and Inclusion (TRAIN) Law, which took effect on January 1, 2018, cooperatives, through the Cooperative Development Authority (CDA), are required to submit regular reports on the fiscal incentives they are enjoying.
The CDA, in turn, will submit a consolidated report to BIR for inclusion in the DOF database created under the Tax Incentives Management and Transparency Act (Timta).
The Joint Administrative Order (JAO) 1-2019 between the CDA and BIR was signed by Dominguez last May 16, to implement these new regulations under TRAIN.
With this directive, all registered cooperatives are required to file their tax returns and pay their tax liabilities, if any, using the electronic system for filing and payment of taxes of the BIR.
All registered cooperatives that were issued Certificates of Tax Exemption and which subsequently availed themselves of tax incentives are required under the JAO to submit to the CDA their respective Annual Tax Incentives Reports on or before April 30 of the succeeding year, or 15 days from the deadline of filing of their Annual Income Tax Returns, depending on the accounting period used.