THE BUREAU of Internal Revenue (BIR) bats for including cooperatives and zero-rated exporters in the Tax Incentives Management and Transparency Act, to mandate reportorial obligations, in a bid to plug up revenue leakages.

But Senator Juan Eduardo M. Angara, chairman of the Senate Ways and Means Committee, said that instead of flat out removing the exemptions, the government should just tighten reportorial conditions and zero in on abusive cooperatives.

The committee on Wednesday held its sixth hearing, amid the congressional recess, on the tax reform program of President Rodrigo R. Duterte’s administration, after the first of four tax reform packages was approved last May by the House of Representatives before the recess. The matter is now in the Senate, as Congress resumes session before the end of this month.

Wednesday’s hearing tackled, among other things, the removal of value-added tax (VAT) exemptions of some sectors.

BIR spokesperson Assistant Commissioner Marissa O. Cabreros, for her part, told the committee that the tax bureau is having difficulty auditing transactions of cooperatives, as they fail to distinguish sales to members and nonmembers, and this would have determined whether certain transactions are subject to value-added tax.

“With reference to cooperatives, we believe (in) the creation of the cooperatives in general, but there are some cooperatives that are… taking advantage of the benefits given to real cooperatives,” she said, adding that the cooperative code prohibits the BIR from auditing cooperatives unless authorized by the Cooperative Development Authority.

Currently, cooperatives are exempt from paying VAT on their sales. Under House Bill 5636, or the proposed Tax Reform for Acceleration and Inclusion Act approved by the House, retains the VAT exemption for cooperatives. The Department of Finance (DoF) wants to push for removing these exemptions.

“Let’s look at the abuse of the cooperative structure, If there are provisions in the co(-)op code that needs amending, then by all means, let’s take a look at that,” Mr. Angara said.

For her part, Senator Cynthia A. Villar raised concerns about lifting the exemptions in the housing sector, particularly for the purchase of properties worth P3 million and below.

“The VAT exemptions on housing… the cheap costs of houses, you’re removing it from the people,” she said. “I don’t think we should discourage housing.”

DoF has proposed removing the VAT exemptions and providing vouchers on direct subsidies for the poor, in an effort to ensure that tax perks in housing are not taken advantage of by the rich.

Mr. Angara said they are open to retaining the said tax exemption: “We are free to amend it. The power is with us. Malala na kasi ’yung sitwasyon, tapos lalagyan pa natin ng buwis, di lalala pa lalo yung sitwasyon (The situation is critical, and if you add to that the taxes, it will worsen).”

In her turn to address the committee, DoF Undersecretary Antonette C. Tionko said in part: “We will consider their suggestions obviously and we will work with them to come up with a package that’s very acceptable to all parties concerned.”

Interviewed by reporters after the hearing, Senator Joseph Victor G. Ejercito said: “Marami pang (There are still many) issues that need to resolved. (Especially when it comes to petroleum, sweetened beverage, sa housing against ako diyan (I’m against removing tax exemptions in housing).”

Mr. Angara, in his interview with reporters, said: “Tingnan natin ang ginagawa natin manageable ang pandinig sector by sector tapos titingnan ang suma-total (Let’s see what we can do that’s manageable in hearing out sector by sector, then let’s see how things go as a whole).” — Elijah Joseph C. Tubayan, with Mario M. Banzon

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