In our previous column we discussed on some tips on how to deal with the challenges of the changing business environment. I would like to add some information that needs to be considered by cooperatives and small and medium enterprises (SMEs) in dealing with the changes in government policies. Others might be knowledgeable on these laws but I believe we need to share to those who failed to notice the possible implications of non-compliance. We often listen to some queries and complaints of some institutions that are caught unaware when certain sanctions are applied to them. They only realize that they have no knowledge on such issuances due to limited information education campaign or possibly because they ignored the advisory? I would like to point out that our purpose in presenting these laws is purely to inform our readers and not to interpret the law. How I wish I could reprint these laws in this space but I believe the presence of social media and advance information communication technology can help facilitate access to full text of the laws. For purposes of having an idea on the said laws I decided to focus on the rationale and the possible implications of non-compliance. To fully appreciate the laws we need to consult with the responsible agencies tasked to implement and monitor such or with institutions having jurisdiction of the said Acts.
Let me start with the Credit Information System Act (RA No. 9510) that had been approved on October 31, 2008. I remember that series of roadshows had been held nationwide but the implementation was questioned by some quarters especially among cooperatives. To further understand the intention of the law allow me to borrow some provisions of the Act. “Section 2. Declaration of Policy. The State recognizes the need to establish a comprehensive and centralized credit information system for the collection and dissemination of fair and accurate information relevant to, or arising from, credit and credit-related activities of all entities participating in the financial system. A credit information system will directly address the need for reliable credit information concerning the credit standing and track record of borrowers.” Cooperatives need to comply with the provisions of this law as the sanction is quite heavy. Section 11. Penalties. – Any person who willfully violates any of the provisions of this Act or the rules and regulations promulgated by the SEC in coordination with the relevant government agencies shall, upon conviction, suffer a fine of not less than Fifty thousand pesos (PhP50,000.00). nor more than One million pesos (PhP1,000,000.00) or imprisonment of not less than one (1) year nor more than five (5) years, or both, at the discretion of the court. Responsible office in the implementation of this Act is the Central Credit Information Corporation.
Another law is the Tax Incentive Management and Transparency Act (RA No. 10708) often referred as TIMTA Law that was approved last December 9, 2015. Let us start with the background of the law through the provision under certain sections. Section 2. Declaration of Policy. -It is hereby declared the policy of the State to promote fiscal accountability and transparency in the grant and management of tax incentives by developing means to promptly measure the government’s fiscal exposure on these grants and to enable the government to monitor, review, and analyze the economic impact thereof and thereby optimize the social benefit of such incentives. Section 4. Filing of Tax Returns and Submission of Tax Incentives Reports. — All registered business entities are required to file their tax returns and pay their tax liabilities, on or before the deadline as provided under the National Internal Revenue Code (NIRC), as amended, using the electronic system for filing and payment of taxes of the Bureau of Internal Revenue (BIR). Given this provision cooperatives must ensure that they file their tax returns within the prescribed period. Often, deadline of filing is every 15th day of April of the year. The earlier cooperatives will submit their reports then it is favorable for CDA to consolidate reports for submission to concerned agency. The sanctions for the business entities like cooperatives and investment promotion agencies (IPAs) as provided in the provisions of the law is burdensome when not complied. SEC. 7. Penalties for Noncompliance with Filing and Reportorial Requirements. — Any registered business entity which fails to comply with filing and reportorial requirements with the appropriate IPAs and/or which fails to show proof of filing of tax returns using the electronic system for filing and payment of taxes of the BIB shall be imposed the following penalties: a. First (1st) violation — payment of a fine amounting to one hundred thousand pesos (P100,000.00); b. Second (2nd) violation — payment of a fine amounting to five hundred thousand pesos (P500,000.00); and c. Third (3rd) violation — cancellation of the registration of the registered business entity. Provided, That if the failure to show such proof is not due to the fault of the registered business entity, the same shall not be a ground for the suspension of the ITH and/or other income-based tax incentives availment.
Any government official or employee who fails without justifiable reason to provide or furnish the required tax incentives report or other data or information as required under this Act shall be penalized, after due process, by a fine equivalent to the official’s or employee’s basic salary for a period of one (1) month to six (6) months or by suspension from government service for not more than one (1) year, or both, in addition to any criminal and administrative penalties imposable under existing laws. TO BE CONTINUED