Revisiting Our Amended Cooperative Code

Manila Bulletin, November 28, 2011 | Go to article overview

Revisiting Our Amended Cooperative Code


MANILA, Philippines - Over twenty-one years ago, our Congress enacted the Cooperative Code of 1990 (R.A. 6938) primarily to support our agrarian land reform program that was implemented a year earlier. It's ironic that the objective of land redistribution is to break up land ownership into small pieces and for a cooperative to put them back together - with the end view to unite farmers' interest and resources, consolidate the management of land, and make small farming more efficient and productive.

It's also interesting to note that cooperatives have a special mention in our Constitution. Section 1 of Article XII mandates among others, that the state shall promote industrialization and full employment through private enterprises, including corporation, cooperatives, and similar collective organizations. The entire Section 15 under same article further provides that "the Congress shall create an agency to promote the viability and growth of cooperatives as instruments for social justice and economic development." Thus, under our Constitution, we could reasonably argue that when we need a job, there are three alternatives legally available: get a job provided by somebody else (corporate employment); invent a job and work by yourself (entrepreneurship); or work in cooperation with others (cooperatives).

Sadly, after more than two decades, our cooperative development efforts still urgently need the light of day. In 2009, there were 78,611 cooperatives existing on paper but only a third or 23,836 were reported operational. These active cooperatives were composed of 5,856,000 members or a mere 6.0 percent of our total population. This is a far cry from Singapore's 50.0 percent! We are also lagging behind our other Asian neighbors. As measured against their total number of family households, cooperative members in Indonesia and Japan represent 27.5 percent and 33.0 percent, respectively. South Korea is also much ahead with 40 percent of their agriculture produce being marketed via cooperatives.

On Feb. 17, 2009 our 18-year old law was finally amended to further strengthen the regulatory powers of the Cooperative Development Authority (CDA), an agency tasked to oversee the operation of all cooperatives nationwide. The new code (R.A. 9520) further grants limited banking functions, expands the types or categories of cooperatives, and provides enhancements to their existing tax exemption privileges and non-tax benefits. Some of the salient features of the new code are itemized below.

Tax-Exemption Benefits

A cooperative must be duly registered with CDA and must hold a BIR Certificate of Tax Exemption before it could officially avail of tax exemptions. R.A. 9520 differentiates cooperatives which transact business only with their members and those that deal with both members and non-members. For the first classification, cooperatives are fully exempted from paying all existing taxes and fees such as: the 32 percent income tax, 12 percent VAT, percentage tax, customs duties, donors' tax, excise tax, documentary stamp tax, and annual registration fee. …

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