Penalties await coops failing to submit tax incentive reports

March 18, 2025 | 12:00am

MANILA, Philippines — The government will impose penalties on cooperatives that fail to comply with tax incentive reporting under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.

In a joint administrative order, the Department of Finance, Cooperative Development Authority (CDA) and Bureau of Internal Revenue (BIR) issued the guidelines that will govern the imposition of appropriate penalties for failure to submit mandated reports on tax incentives and benefits data.

This will cover all CDA-registered cooperatives with a valid and subsisting certificate of tax exemption (CTE) from the BIR.

The CREATE Act prescribes the penalties for non-compliance with the filing and reportorial requirements by cooperatives registered with the CDA.

Based on the order, cooperatives are mandated to provide their annual tax incentives report (ATIR) and annual benefits report (ABR), both of which must be submitted within 30 days from the statutory deadline for filing tax returns and payment of taxes, covering all tax incentives and benefits of the preceding taxable year.

Failure to do so will result in the issuance of a show cause order and another 15 days to comply and submit justification for the non-compliance.

In case of partial or incomplete submission, the CDA will send a notice of deficiency wherein cooperatives will also be given 15 days to comply. Non-compliance will result in a show cause order.

Upon determination of the CDA and after due process, any registered cooperative that fails to comply with reportorial requirements will be fined P100,000 for the first offense and P500,000 for the second offense.

The monetary penalties will be imposed and collected by the CDA and will accrue to the general fund.

Further, there will be a revocation of the BIR-issued CTE of the cooperative if it commits a third offense. This can be done through either motu proprio or upon the order of the Fiscal Incentives Review Board (FIRB) or CDA.

Registered cooperatives whose CTEs will be revoked by the BIR shall be liable for the payment of taxes including surcharges, interests and compromise penalties, if any.

In case of financial incapacity to pay fines, payment by installment will be allowed within two years. The CDA may extend the installment up to three years for micro-cooperatives or those with assets of up to P3 million.

The CDA is mandated to exert all efforts to provide technical and operational support to registered cooperatives to ensure compliance with the submission of reportorial requirements.

The order will take effect on March 28.