No more lifting of VAT exemptions for cooperatives

Mara Cepeda

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No more lifting of VAT exemptions for cooperatives
Speaker Pantaleon Alvarez agrees to retain the VAT exemptions for cooperatives in the proposed tax reform package at the request of party-list representatives

MANILA, Philippines – House Majority Leader Rodolfo Fariñas on Wednesday, May 24, confirmed the value-added tax (VAT) exemptions for cooperatives will be retained in the proposed comprehensive tax reform package.

“Yes, [the VAT exemptions will stay],” was Fariñas’ reply to Rappler when asked to confirm reports that Speaker Pantaleon Alvarez agreed to retain the VAT exemptions for cooperatives.

The tax reform package being proposed by the administration of President Rodrigo Duterte or House Bill (HB) Number 5636 is currently up for debates in the House plenary. The amendment retaining the VAT exemptions for cooperatives has yet to be introduced on the floor.

The initial package of tax reforms, the first of 4, includes the lowering of personal income tax rates, additional excise taxes, and the reduction of VAT exemptions to counter revenue loss, including for cooperatives. (READ: Duterte’s tax reform: More take-home pay, higher fuel and auto taxes

The Department of Finance (DOF) estimates around P5 billion in government revenue will be generated by lifting the VAT exemptions for cooperatives.

But the cooperative sector has been urging Duterte and the House leadership to retain their VAT exemptions, arguing that loan interest rates will increase by as much as 5% to 6% if their exemptions are removed.  

The 47 lawmakers forming the House party-list coalition also called for the retention of the VAT exemptions for cooperatives.

“The tax exemption privilege bestowed upon them is the only countervailing force to democratize wealth and power in our society, to such end where the marginalized are empowered to take it upon themselves to combat poverty and change their lives for the better,” said the House party-list coalition in a statement.

“We recognize that cooperatives are agents of change, acting as primary partners of the national government in delivering basic services to the people, especially those in rural areas and no less than the Constitution guarantees their protection, which the coalition now moves to uphold,” the bloc added.

House party-list coalition president and AKO Bicol Representative Rodel Batocabe earlier said the bloc was mulling abstaining from voting on HB 5636 should the VAT exemptions for cooperatives be removed. – Rappler.com

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Mara Cepeda

Mara Cepeda specializes in stories about politics and local governance. She covers the Office of the Vice President, the Senate, and the Philippine opposition. She is a 2021 fellow of the Asia Journalism Fellowship and the Reham al-Farra Memorial Journalism Fellowship of the UN. Got tips? Email her at mara.cepeda@rappler.com or tweet @maracepeda.