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Exemption of Cooperatives from the payment of local taxes, fees, and charges per BGLF MC No. 31 s 2009

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Exemption of Cooperatives from the payment of local taxes, fees, and charges per BGLF MC No. 31 s 2009

  1. 1. Cooperative Development Authority presentation on Exemption of Cooperatives from the Payment of Local Taxes, Fees and Charges per BGLF Memorandum Circular no. 31-2009 Atty. PHILLIP RAYMUND S. RIVERA ATTORNEY III, COOPERATIVE DEVELOPMENT AUTHORITY DAGUPAN, EXTENSION OFFICE (CDA-DEO)
  2. 2. HIGHLIGHTING… This is to draw your attention to an important issuance of the Bureau of Local Government Finance (BLGF) concerning local taxes, fees and charges that will be imposed against duly registered cooperatives. Cognizant of the fact that several cooperatives were being taxed inappropriately by certain LGUs, the 14 November 2016 BLGF Memorandum Circular No. 11-001-2016 was issued to enjoin those concerned to strictly observe BLGF Memorandum Circular No. 31-2009. Attached to this memorandum is a copy of the subject BLGF Memorandum Circular. You are therefore directed to cause the dissemination of said Memorandum Circular. For the information and guidance of all concerned.
  3. 3. Highlighting… “However, cooperatives transacting business with both members and non-members are required to obtain or secure a Mayor’s permit, which is implemented under the police power of the local government unit to protect public interest and in furtherance of the general welfare clause enshrined both in the Constitution and the Local Government Code (Section 16- General Welfare Clause), and pay the commensurate cost of regulation, inspection and surveillance of the operation of its business but not exceeding One Thousand Pesos (Php1,000.00). Likewise, said cooperatives shall secure a Community Tax Certificate (CTC) and pay the basic tax of Five Hundred Pesos (Php500.00) as a juridical entity.” (Underscoring Ours) dated March 2018dated March 2018
  4. 4. Coop & the Issue Some LGUs assess real property and other local taxes to cooperatives and refuse to issue Permit unless settled Issues and concerns received from various interested parties Some LGUs charge fees for Permits exceeding the limit fixed There are different fees charged from cooperatives aside from the basic permit fee such as Barangay Clearance Fee, BFP Clearance Fee, etc.
  5. 5. LEGAL BASIS BLGF Opinion dated 25 Feb 2011 “accordingly, this Bureau expresses the view that for as long as a cooperative is duly registered with the Cooperative Development Authority (CDA) under the provisions of RA6938 & RA9520, it shall remain exempt from the payment of local taxes. ” (Underscoring ours) Exemption from Local Taxes ART. 61 Par. 3 of RA9520 “All cooperatives, regardless of the amount of accumulated reserves and undivided net savings shall be exempt from payment of local taxes…” (Underscoring ours) RA7160 Section 133 “Common Limitations on the Taxing Powers of Local Government Units… Unless otherwise provided herein, the exercise of the taxing power of provinces, cities, municipalities and barangays shall not extend to the levy of the following: (n) Taxes, fees or charges on xxx and cooperatives duly registered under RA No. 6810 and RA No. 6938 xxx” (Underscoring ours)
  6. 6. LEGAL BASIS BLGF MC NO. 11-001-2016 (Reiterating BLGF MC No. 31-2009) “However, cooperatives transacting business with both members and non- members are required to obtain or secure a Mayor’s Permit” xxx and pay the commensurate cost of regulation, inspection and surveillance of the operation of its business not exceeding P1,000.00 and pay the basic tax of P500.00 as a juridical entity” Limitation/s on Fees and Charges DILG MC No. 2017-16 (Citing DILG MC No. 2010-120) “Emphasized the exemption of duly registered cooperatives from payment of applicable taxes, fees and charges subject to compliance with BLGF MC No. 31- 2009 (with penal provision)
  7. 7. INITIAL ACTION/S TAKEN BY CDA-DAGUPAN EXTENSION OFFICE The CDA-DEO issued a formal letter to the different government offices concerned and further asked for the strict implementation of the pertinent legal issuances regarding the Exemption of Cooperatives Duly Registered with the Cooperative Development Authority (CDA) from Payment of Local Taxes, and Limiting the Amount of Local Fees and Charges to PhP 1,500.00 (Mayor’s Permit and Regulation Cost of PhP 1,000.00; and Community Tax Certificate of PhP 500.00).
  8. 8. INITIAL ACTION/S TAKEN BY CDA-DAGUPAN EXTENSION OFFICE The following are the addressees to the aforementioned letter: 1. Office of the Provincial Governor of Pangasinan; 2. Office of the Provincial Governor of La Union; 3. Office of the Provincial Governor of Ilocos Sur; 4. Office of the Provincial Governor of Ilocos Norte; 5. Office of the RD of DILG R1; 6. Office of the DILG Provincial Director of Pangasinan; 7. Office of the DILG Provincial Director of La Union; 8. Office of the DILG Provincial Director of Ilocos Sur; 9. Office of the DILG Provincial Director of Ilocos Norte; 10.Office of the RD of BLGF R1;
  9. 9. The following are the salient contents of the aforementioned letter: Let it be respectfully recalled that the 1987 Constitution guarantees the protection of cooperatives and considers the same as instruments of social justice and economic development.1 Corollary, fostering the creation and growth of cooperatives as practical vehicle towards the attainment of economic development and social justice was declared as a policy of the State.2 ________________ 1 Article XII, Section 15, 1987 Philippine Constitution. 2 Article 2, RA 9520 (Philippine Cooperative Code of 2008)
  10. 10. The following are the salient contents of the aforementioned letter: In relation to the foregoing legal pronouncements, Section 133(n) of the Local Government of 1991, explicitly and unequivocally declared that the taxing powers of provinces, cities, municipalities, and barangays shall not extend to cooperatives. Sections 60 and 61 of RA 9520 (Philippine Cooperative Code of 2008) and the Joint Rules and Regulations Implementing Articles 60, 61 and 144 of RA 9520 in relation to RA 8424 (NIRC), as amended, further enshrined the aforementioned tax exemption. In addition, Section 234(d) of the Local Government of 1991 made a categorical declaration that further exempted duly registered cooperatives under RA No. 6938 from payment of real property tax.
  11. 11. The following are the salient contents of the aforementioned letter: On the other hand, the Bureau of Local Government Finance, declared and clarified in its BLGF MC No. 31-2009 dated 07 October 2009 that cooperatives transacting business with both members and non-members are still required to pay Local Fees and Charges amounting to PhP 1,500.00 (Mayor’s Permit and Regulation Cost of PhP 1,000.00; and Community Tax Certificate of PhP 500.00), exclusive of payment for the use of public utilities owned by the LGUs concerned. This matter was further stated under BLGF MC No. 11-001-2016 dated 14 November 2016 reiterating BLGF MC No. 31-2009; DILG MC No. 2010-120 dated 20 October 2010; and DILG MC No. 2017-16 dated 01 February 2017.
  12. 12. The following are the salient contents of the aforementioned letter: Corollary, several cooperatives within the region are being assessed of the following local taxes, fees, charges and/or dues:   1.Garbage Fee; 2.Sanitary Inspection Fee; 3.Environmental Inspection fee; 4.Fire Inspection Fee; 5.Personnel Occupational Tax; 6.Personnel Police Clearance; 7.Personnel health Certificate; 8.Engineering Inspection Fees: a. Building Inspection Fee; b. Electrical Inspection Fee; c. Plumbing Inspection Fee; d. Mechanical Inspection; 9.City Zoning Fee 10.Billboards/Signboards Fee; 11.Sewerage Fee 12.Tax Clearance Fee; 13.Certificate Fee; and 14.Other Similar Fees.
  13. 13. The following are the salient contents of the aforementioned letter: The foregoing enumeration of improperly imposed local taxes and fees enormously exceeds the PhP 1,500.00 prescribed by the abovementioned circular on the matter. Worse, cooperatives are misguidedly imposed with local taxes under the label “fees and charges” that are in essence part of the Mayor’s permit and other regulatory fee, which is unmistakably prescribed at PhP 1,000.00 limit….. ________________ 1 BLGF Opinion dated 25 February 2011, Re: Northern Luzon Federation of Cooperatives and Development Center (NORLU CEDEC) Local Tax Imposition 2 BLGF Opinion dated 26 April 2010, Re: Coops for Christ Local Tax Imposition 3 BLGF Opinion dated 24 January 2011, Re: Municipal Treasurer of Tayabas, Quezon Local Tax Imposition
  14. 14. CONCLUSION Requesting Regional Development Council 1 Assist CDA in mandating LGUs to strictly observe the: 1. Absolute Exemption of Cooperatives from the Payment of Local Taxes 2. Limit to Php1,500.00 from the Total Payment of Local Fees and Charges In compliance w/ BLGF MC NO. 11-001-2016 & DILG MC No. 2017-16

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