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PIA Press Release
2010/07/07

MCPI seeks new classification for microfinance NGOs tax payment

By Mai Gevera

Davao City (7 July) -- Part of their efforts in aiming beyond microcredit, the Microfinance Council of the Philippines, Inc (MCPI) has asked the Bureau of Internal Revenue (BIR) a re-classification for the Microfinance institutions non-government organizations (MFINGOs) for tax payment.

In a press conference yesterday (July 5), MCPI President Ruben De Lara bared the plea of the industry for the re-classification of the MFINGOs as no longer part of the profit businesses paying 35 percent corporate rate.

Before, the industry players especially the NGOs were made to pay 35 percent corporate rate as they have been categorized as profit-oriented business.

"However, we would like to stress that the members of these MFINGOs are mostly the poor who avail loan portfolio at P3,000 the least."

He added that the BIR lately slowed down in collecting the 35 percent corporate rate and rather prioritized the collection of 12 percent value-added tax.

Most of the MFINGOs who started paying for the 12 percent VAT have passed on to their clients the value-added tax.

"Who will pay for this tax but the poor," he said.

This pushed the MCPI to propose for a re-classification of MFINGOs as no longer under the profit-oriented organizations.

This is expected to lessen the burden of the members to pay their loan as they will only be taxed 2 percent of their net revenue.

This is a pending bill that waits to be heard after it got caught up in the middle of the election fever.

"We will have to start from square one just to have this bill pass in both lower and upper house," he added.

De Lara said that it is a continuing move of the MCPI as it aims to provide protection and security to the clients of these MFINGOs.

MCPI is the national association of 46 Filipino institutions together striving to enable MFIs to attain and maintain certain standards of practice for the welfare of clients, the sustainability of operations and for the eradication of poverty in the Philippines. (PIA XI) [top]

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