The Philippine Chamber of Cooperatives, Inc. (PCCI) is opposing a congressional proposal to open the local market to foreign cooperatives, warning it could undermine domestic co-ops and push the sector toward a corporate model.

PCCI Chairperson Noel D. Raboy told a press briefing on Friday, Oct. 10, that the organization is against the proposed amendments to the Cooperative Code of the Philippines, which seek to allow foreign cooperatives to “invest, partner or enter into joint ventures with local federations.”

“They want to remove democratic control at the federation level and turn them into corporations that foreign entities can enter or invest in,” Raboy noted.

Raboy said that while primary cooperatives follow the one-member-one-vote rule, the amendments would allow federations to adopt a share-based voting system, where voting power depends on capital contribution.

“Basically, that has become a corporation!” Raboy asserted, noting that should these amendments be approved, it would mean erasing locally owned and controlled cooperatives.

For Raboy, the Philippines would be laughable if it ends up with “corporate cooperatives.”

“Once you shift to share-based voting, it’s no longer a cooperative,” he said, adding that the push for this setup is really about tax avoidance. “They want to be classified as cooperatives so they don’t have to pay taxes.”

Senate Bill 1431 sets a cap that limits foreign cooperatives to owning no more than 40 percent of a federation’s total equity.

Under Section 169 of the bill, the government seeks to allow foreign cooperatives to invest in, partner with, or form joint ventures with local federations, as long as they are accredited in their home countries and registered with the Cooperative Development Authority (CDA).

They must also follow Philippine laws on doing business, and any agreement with local cooperatives would need CDA approval.

Foreign cooperatives dealing with local federations must follow Philippine tax, anti–money laundering, and foreign equity rules, and will be regulated by the appropriate agencies throughout their engagement.

Additionally, foreign shareholders are barred from influencing how federations are run, whether directly or indirectly. Management and internal decisions must remain fully independent and autonomous, with local cooperatives still 100 percent owned and controlled by Filipinos.

Apart from this resistance, Raboy has also called on the Bureau of Internal Revenue (BIR) to junk some of the country’s main tax agency rules, including the requirement for individual members to have a tax identification number (TIN) in order to be tax-exempt.

Raboy said the PCCI “challenges the validity of these revenue memorandum circulars before the Supreme Court (SC).

“These issuances unlawfully restrict the tax exemption privileges granted to cooperatives under the Cooperative Code,” he stressed.

The group is also urging the government to uphold cooperatives’ rights and privileges and stop regulators from imposing extra administrative requirements that are not required by law, saying these lead to penalties worth millions and even force some cooperatives to shut down.

To date, there are over 13 million members of cooperatives across the country. Raboy reported that “around ₱700 billion is the loan portfolio of all cooperatives nationwide.”

As per Raboy, requiring cooperative members to secure TINs has prevented cooperatives from accessing tax exemptions.

“When they deposit their daily sales in the cooperative, we will refuse because it doesn’t have a TIN... That kind of program is not inclusive,” he argued, adding that filing a renewal of the tax exemption will be challenging, which could eventually result in the cooperative being taxed.