CDA says: “We tried to mitigate the harshness of JAO 1-2019”
At the discussions of the Technical Working Group on the Tax Exemption held March 4 in the House of Representatives, leaders of primary co-ops complained that the penalties for non-submission of the Annual Tax Incentive Report (ATIR) are “too harsh.”
The Joint Administrative Order 1-2019 requires co-ops to submit ATIR on April 30. The JAO outlines the details of the implementation of the Tax Incentive Management & Transparency Act (TIMTA) or Republic Act 10708.
Ms. Estelita Aguirre of the Asian Institute of Taxation asked: “Under RA 10708, there is also another set of penalties provided which is Php 100,000 for the first offense , Php 500,000 for the second offense, and only on the third will there be cancellation or revocation of the registration of CTE. Are we saying now that RA 10708 supercedes this JAO?”
The DOF officials said they would look into it.
PENALTY VS. REVOCATION
Here, the CDA’s Legal Chief, Atty. Jovelyn Marquez said: “We were part of the TWG and we considered that. But we felt that that penal provision of RA 10708 was not applicable to the cooperative or we think of some kind of socialized penalty. Because for the Large Co-operatives, Php 100,000 is just loose change but for micro-coops, that is heavy. It can’t be applied across the board.”
She added: “We considered the National Internal Revenue Code, where the penalty is only Php 10,000. But it includes imprisonment. The penalty is lower but it involves imprisonment!”
“Lalo magagalit ang mga co-op leaders sa CDA pag ito yung tinanggap namin na penal provision.” (The co-ops will be even more angry with the CDA had we accepted that penalty.)
“That is why we came up with this penal provision in the JAO, which is a compromise. This is the most ‘Fair’. Because if you don’t submit the ATIR – which is all the BIR requires if you want to enjoy tax exemption – you revoke that privilege,” she concluded.
She also revealed that the CDA had haggled with the BIR for ‘socialized penalties’, where Large co-ops would be charged higher penalties compared to Medium and Small co-ops.
Aguirre lamented that either way (whether penalties or CTE revocation), it was heavy for co-ops.
The BIR officials present, however, said: “We are open to suggestions to amendments to the JAO.”
The PCC’s Edwin Bustillos gave his take: “We disagree with the CDA. Because in Section 7 of RA 10708, it pertains to any registered business entity. So between the business – whether corporation or whatever – compared to cooperatives, why is the application of the penalty on cooperatives heavier than corporations? Where is the ‘fairness’ there?
He chided the CDA: “Dapat bago ginawa ang JAO, meron consultation with the co-op sector.” (Before the JAO was even made, you should have consulted the co-op sector.)