TAGBILARAN CITY – The Bureau of Internal Revenue (BIR) in the province admitted it would be at the losing end when active members of credit cooperatives stop paying the 20-percent withholding tax to the national government.

This came following the recent Supreme Court ruling that members of credit cooperatives are exempted from paying the said tax.

The second division of the SC has promulgated the ruling penned by Associate Justice Mariano del Castillo, reports said. The High Court reversed the Court of Tax Appeals (CTA) decision “ordering the Dumaguete Cathedral Credit Cooperative (DCCCO) to pay over P2.6 million in unpaid withholding taxes on interest from savings and time deposits of its members for the taxable years 1999 and 2000, as well as delinquency interest of 20 percent per annum.”

In an exclusive interview Friday, Tohammie Yahyah, assistant Revenue District Officer under RDO No. 84 here, confirmed that “definitely” the High Court ruling could adversely affect the revenues of the agency.

But he said that he could not “categorically” give further comment on the said court decision until his office received the official communication from BIR central office. He neither said how much would be the losses in terms of collections of this kind of tax.

For his part, cooperative development specialist of district II Mario Limbaga said in a separate interview Saturday morning that the Supreme Court ruling is a welcome development. He added that this “beneficial” to all cooperative members despite of the fact this may be a meager amount for every individual member.

The High court also maintained that members of CDA-registered cooperatives “deserve a preferential tax treatment pursuant to RA 6938 as amended by RA 9520 (Cooperative Code of the Philippines ).”

The ruling is basically anchored on Article 2 of RA 6938, “it is a declared policy of the State to foster the creation and growth of cooperatives as practical vehicle for promoting self-reliance and harnessing people power towards the attainment of economic development and social justice.”

The report quoted SC as having said, “Thus, to encourage the formation of cooperatives and to create an atmosphere conducive to their growth and development, the State extends all forms of assistance to them, one of which is providing cooperatives a preferential tax treatment.” (rvo)