The Philippine Chamber of Cooperatives, Inc. (Coop Chamber) is asking Congress to raise the reserve fund tax-exemption ceiling for cooperatives to ₱100 million from the current ₱10 million.

Coop Chamber Secretary General Edwin A. Bustillos told reporters that the proposal is a long-overdue update to a four-decade-old threshold, one that will not hurt government coffers.

During technical working group discussions, Bustillos revealed the proposal faced pushback from the Department of Finance (DOF) and the Bureau of Internal Revenue (BIR) over potential revenue losses.

However, Bustillos explained that the ₱10 million threshold was instituted nearly 40 years ago when the sector was significantly smaller.

He noted that surplus funds generated by cooperatives are legally earmarked as statutory reserves for social development rather than commercial profits.

“Cooperatives’ surplus goes back to the people. They have statutory funds that are channeled to the community,” Bustillos said. For instance, roughly ₱3 billion has been injected into community development funds for infrastructure, scholarships, and medical missions, among other initiatives.

Bustillos added that spending on community development, education, and training goes uncounted in gross domestic product (GDP), despite cooperatives pumping billions into these efforts.

The sector also shoulders the cost of leadership training, financial inclusion, and financial literacy programs that would otherwise rely on government agency partnerships.

Furthermore, he stressed that trillions of pesos circulating within the sector help nearly 14 million members start and sustain small businesses, pursue their education, and cover medical bills for family members.

Citing these on-the-ground contributions, the Coop chamber argued that while granting a higher tax relief threshold means forgone tax revenues, those funds ultimately recirculate into local communities.

“Therefore, raising the accumulated reserves threshold to ₱100 million would not result in a significant revenue loss for the BIR and the DOF,” Bustillos said. “Hopefully, the ₱100-million cap will be passed during the Senate’s second regular session.”

Under the Philippine Cooperative Code, registered cooperatives transacting exclusively with members are exempt from national and local internal revenue taxes. Transactions with non-members, however, remain subject to applicable taxes.

Cooperatives with accumulated reserves and undivided net savings of up to ₱10 million enjoy comprehensive tax privileges. Those exceeding the threshold pay taxes on the excess, though they retain specific exemptions for local taxes and qualified transactions.

Bustillos pointed to this framework to clarify that “billionaire” cooperatives still contribute to government revenues by paying taxes on non-member transactions and reserves above the threshold. Only about 140 of the roughly 20,000 cooperatives in the country fall into the “billionaire” category—mostly in finance, with a few in agriculture.

Tax privileges apply only to core activities outlined in their articles of cooperation, bylaws, and BIR tax exemption certificates, leaving all other economic activities taxable.

Beyond tax disputes, the sector is grappling with digital compliance challenges. The Coop Chamber noted that many micro-cooperatives—particularly those representing farmers, fisherfolk, and indigenous peoples—struggle to meet digitized reporting mandates due to a lack of devices and reliable internet access.

To address this, Coop Chamber Chairperson Noel D. Raboy said the group is pushing for compliance relief similar to that offered by the Securities and Exchange Commission (SEC), such as permitting simple bookkeeping instead of requiring costly certified tax accountants (CTAs) for small co-ops.

These ongoing struggles have driven the sector to seek systemic legislative reform. The Coop Chamber plans to consolidate its members into a unified “co-op vote” and field a senatorial candidate under a national cooperative party in the 2028 elections. By placing a cooperative leader in the Senate, the sector aims to champion community-based development and secure lasting policy support for micro-enterprises.