THE Department of Finance and the Bangko Sentral ng Pilipinas (BSP) took opposing positions on the legislation of the Cooperative Banking Act, with the DOF citing redundancy in some of the proposed incentives.
In a Senate Hearing on Wednesday, DOF Director Arvin Lawrence N. Quiñones said the finance department doesn’t support the bill as there are already current laws in place to meet the bill’s objectives.
“First, the proposed tax exemptions from all national, city, provincial, municipal or barangay taxes, fees and charges is a reiteration of the exemptions provided in the Philippine cooperative code,” Quiñones said.
“Second, the BIR [Bureau of Internal Revenue] and the CDA [Credit Development Authority] joint rules and regulations already clarify that duly registered cooperatives dealing or transacting businesses with members are exempt from paying taxes under the tax code, as amended, which includes taxes on income, value added tax, percentage tax, loaners tax, excise taxes and the other fees and charges,” the DOF Director added.
The BSP, however, expressed support for the bill.
In the same hearing, BSP Managing Director Ma. Belinda G. Caraan said the BSP supports the passage of legislative measures for cooperative banks as a “practical vehicle towards the attainment of economic development and social justice.”
“The BSP also recognized the important role played by cooperative banks in the delivery of basic financial services to the public and to its member cooperatives and individual members,” Caraan said.
“In addition, since cooperative banks are imbued with public interest, there is a need to strengthen the regulatory and supervisory powers of the BSP over these cooperative institutions,” the BSP managing director added.
In the first six months of 2021, cooperative banking resources reached P23.9 billion, which accounts for 0.12 percent of the Philippine banking system’s total assets of P19.8 trillion.
The sector’s Capital Adequacy Ratio (CAR), meanwhile, stood at 19.7 percent, higher than the required minimum of 10 percent.
As of end-Sept 2021, there are 24 cooperative banks in the country with a network of 145 branches and other offices.