The government of Peru recently passed legislation that recognizes the nonprofit status of credit unions and other cooperatives, exempting their transactions from a sales tax. La Federación Nacional de Cooperativas de Ahorro y Crédito del Perú (FENACREP), a Peruvian member of the World Council of Credit Unions (WOCCU), has been working with a coalition of local advocacy groups to get the bill passed since its introduction to the legislature in December 2009. (No further information on the sales tax-exemption bill is available at the time this brief was published.) WOCCU is a US-based global trade association of credit unions.
“This is not just about a tax break for cooperatives,” says Manuel Rabines Ripalda, first vice chair of WOCCU’s board of directors and president and CEO of FENACREP. He adds, “This law is simply correcting the interpretation of existing cooperative legislation so that tax laws will be properly applied to cooperative acts.”
According to FENACREP, many cooperatives would be on a path to bankruptcy without relief from the new sales tax. Almost 20 percent of Peruvians are members of approximately 1,600 cooperatives, including 900,000 people who are members of 160 credit unions.
By Carol Kim, Research Associate
About World Council of Credit Unions (WOCCU): Headquartered in the United States, WOCCU is a trade association and support agency for credit unions. WOCCU advocates before international organizations on behalf of 40 credit unions operating in 51 countries, and it coordinates with national governments regarding legislation and regulation. Its technical assistance programs introduce tools and technologies intended to strengthen the financial performance of credit unions and increase their outreach. WOCCU consists of three entities: (1) WOCCU proper, (2) WOCCU Services Group, which functions as a for-profit corporation and (3) Worldwide Foundation for Credit Unions, which serves as a charitable organization. WOCCU reported total assets of USD 14 million in its 2009 annual report.
Sources and Additional Resources:
World Council of Credit Unions: “Peruvian Cooperative Law Becomes Reality”, http://www.woccu.org/newsroom/releases?id=1814
MicroCapital.org: “responsAbility Loans $3.9m to Microfinance Institutions Financiera Confianza, Cooperativa Agropecuaria Limitada Naranjillo of Peru”, May 9, 2011, https://www.microcapital.org/microcapital-brief-responsability-loans-3-9m-to-microfinance-institutions-finaciera-confianza-cooperativa-agropecuaria-limitada-naranjillo-of-peru/
MicroCapital’s Universe Profile: World Council of Credit Unions (WOCCU), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=World+Council+of+Credit+Unions+%28WOCCU%29
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/
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