Acquiring a Tax Identification Number (TIN) is essential when conducting any business in the Philippines; if an entity is shown not to have one, the Bureau of Internal Revenue (BIR) and the government will deem it necessary to impose upon them hefty financial penalties. In the Revenue Memorandum Circular (RMC) 158-2022, the bureau updated these penalties for cooperative businesses.
The RMC was made to clarify the penalties for the “non-submission of the TIN numbers of the members of a cooperative business within six months from issuance of its Certificate of Tax Exemption (CTE).” This rule follows Item A3 of RMC No. 124-2020, which includes the corresponding penalties to be imposed.
The RMC follows up from the original CTE issuance regarding cooperatives; it initially explained that “the TIN of members are required to be supplied in the List of Members, as among the requirements for CTE application under Section 236 of the National Internal Revenue Code of 1997.”.
Due to the amendments from the RMC, the BIR now allows for the issuance of a CTE even if it’s incomplete and allows for non-submission of the TIN of members, provided that within six (6) months from the original issuance of the CTE, the cooperative shall submit the TIN requirement.
Penalties for Cooperatives with missing TINs
The following penalties will be incurred if a cooperative member does not have a TIN:
- 1st Offence – Will be given a penalty of One Thousand Pesos (₱1,000) per member without TIN, noting that the aggregate amount to be the offence during a calendar year shall not exceed Twenty-Five Thousand Pesos (₱25,000) as provided under Section 250 of the NIRC, as amended.
- 2nd Offence – Suspension of CTE until compliance with the required submission of the TIN of cooperative members.
- 3rd Offence – Revocation and prohibition to apply for renewal of CTE for a period of 3 years from the date of revocation.
Exemptions from penalties
The previous RMC No. 124-2020 clarified that there are circumstances considered justifiable reasons that will not incur a penalty to a cooperative that failed to submit their member’s TIN within six months of the issuance of CTE:
- “The TIN not submitted pertains to inactive members, provided these inactive members have already been delisted pursuant to Memorandum Circular (MC) No. 2022-14 of the Cooperative Development Authority (CDA).
"List of Active Members with TIN and Inactive Members" must therefore be submitted even prior to the prescribed due date for its submission, which is a year after the CTE issuance to support the failure to complete the TIN of members”.
- “The failure was due to "force majeure" (e.g. state of emergency, state of calamity as declared by the National Government and the concerned Local Government Unit). However, once the "force majeure" ceased to exist, the submission should immediately be made.”
The bureau then explains that all cooperative businesses that have been issued with a CTE (original application), even though they didn’t submit their ACTIVE member’s TIN, are still mandated to submit to Revenue District Office (RDO) in compliance with the six-month grace period. This will be followed unless the reason for non-submission is in line with any justifiable reasons mentioned earlier.
Cooperative businesses must also submit “A List of Active Members with TIN and Inactive Members” following the guidelines given by MC No. 2022-14 of the CDA, including updates, if they are available, within the year after r after issuing the original CTE and yearly after that, to the RDO where the cooperative is registered according to the terms and conditions (as indicated at the back of the issued CTE) per Revenue Memorandum Order No. 76-2010.
The RMC clarifies that any cooperative applying to renew their CTE must complete and submit the TIN of all their active members. The bureau mandates that all active members must secure their respective TIN. Those who don’t submit the TIN of their active members will not qualify for the cooperative for their CTE renewal.
Additionally, the RMC explains that the “List of Active Members with TIN and Inactive Members” following MC No. 22-14 of the CDA must be submitted to the concerned RDO within thirty (30) days from its effectivity on December 27, 2022, meaning that the deadline for this requirement is on January 26, 2023. Failure to do so will subject the cooperative to the penalties in this announcement.