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The first quarter of each year is the busy period for cooperatives. It is the usual time of General Assembly Meetings, preparation of compliance reports to government regulatory agencies like securing Mayor’s/Business Permit from local government units, accomplishment of CDA and BIR reports.
With the recent increase of newly registered cooperatives, allow me to share and reiterate some requirements that must be accomplished by cooperatives to avoid penalties in relation to compliance to regulatory requirements.
Cooperatives as juridical entities need to comply with LGU requirements based on business operations. For some LGUs they require the issued Certificate of Compliance issued by CDA before granting tax incentives like the One Thousand Pesos (Php 1,000.00) Mayor’s Permit and Five Hundred Pesos (P 500.00) Community Tax Certificate. We salute LGUs that implement the provisions of RA 9520 and issued circulars of the Bureau of Local Government Finance in relation to payment of local tax. Also, cooperatives need to be accredited by the local government unit as peoples’ organization and can be actively involved in the provincial or municipal development councils.
The Cooperative Development Authority as the government arm that grants juridical personality to cooperatives requires reports from registered cooperatives. The encoded Cooperative Annual Progress Report (CAPR) with the attached Audited Financial Statement (AFS) duly audited by a CDA Accredited External Auditor, Social Audit Report, Governance and Management Report with attached Mediation and Conciliation Report (2 semesters), List of Officers and Trainings Attended, and the recently added Tax Incentive Monitoring and Transparency Act Report for cooperatives with Certificate of Tax Exemption. Under the CAPR, the Financial Report must be encoded under a system called Cooperative Audited Financial Statement Information System (CAFSIS). Except for the CAFSIS that may not necessarily be printed and signed, all the reports must be duly signed by accountable officers of the cooperative before they are submitted to CDA on or before the 30th day of April. Submission of the required reports is requisites in the issuance of Certificate of Compliance. It must be emphasized that absence of one report, incomplete signatures of accountable officers, and un-encoded CAPR will not be accepted.
Moreover, cooperatives need to comply with requirements of the Bureau of Internal Revenue like securing of Certificate of Registration, Application for Certificate of Tax Exemption, obtaining authority to print receipt, filing of Income Tax Return with attached Audited Financial Statements, remittance of withheld taxes and registration of books of accounts. We encourage cooperatives to comply with these requirements to avoid penalty. Medium and large cooperatives that reached the 10M cap and transact business with members and non-members must revisit the issued BIR Certificate of Registration and compare it with its CDA Registered Articles of Cooperation and by-laws.
Cooperatives that introduced amendment but failed to notify BIR of such changes need to check on some possible inconsistences in the stipulations in the BIR COR and CDA Articles of Cooperation and By-laws. As explained in one tax forum, BIR issued Certificate of Registration can be amended to incorporate additional line of businesses, hence, business expansion and diversification must conform with the prescribed guidelines. With the heightened campaign against tax evaders and recent pronouncements from government officials related to cooperatives being used as fronts, all cooperatives are enjoined to be compliant and become legal entities with good image.
Finally, cooperatives must also abide with other social and legislative laws like compliance to Social Security System, Phil Health, PAG-IBIG and DOLE. Compliance to required employee-employer premium contributions and observance of the minimum wage law is highly encouraged. Cooperatives that hire and fire employees are advised to observe the required processes to ensure smooth operations. I have heard of some cooperatives that lost in labor cases. We can relate on how members feel especially when they take part in the payment of back wages, moral damages and attorneys’ fees attributed to bad decisions of some officers. Officers must always safeguard the welfare of the cooperative institution and avoid mixing personal agenda. Doing the right thing sustain the trust and confidence of members and stakeholders. Better organizations working in peaceful communities can help in nation-building. I don’t mean to be perfect. I am just sharing some insights and hopefully it can be of help.