Peruvian cooperative advocacy organizations recently helped passa law that exempts the country's cooperatives from sales tax intheir transactions with members.

With the help of local advocacy groups like the National CoffeeBoard, Serviperú and the National Confederation of Cooperatives,WOCCU's Peruvian member, La Federación Nacional de Cooperativas deAhorro y Crédito del Perú (FENACREP), had been working to get thePeruvian government to pass the bill since it was introduced intothe legislature in December 2009.

“This is not just about a tax break for cooperatives,” saidManuel Rabines Ripalda, FENACREP's president/CEO. “This law issimply correcting the interpretation of existing cooperativelegislation so that tax laws will be properly applied tocooperative acts.”

“Cooperative acts,” in this case, refers to transactions betweencooperatives and their members, which are now legally recognized asinternal and part of a cooperative's social objectives rather thanas the taxable “sale of goods” or “provision of services.”Third-party transactions are still subject to taxation forcooperatives in Peru, where cooperative advocacy groups struggle togain legal recognition as not-for-profits.

But FENACREP says the new sales tax exemption may save hundredsof the country's 1,600 cooperatives from bankruptcy. Almost 20% ofPeruvians are members of some form of cooperative, according to theorganization, and the new law will help them contribute to Peru'sgross domestic product.

According to WOCCU, Peru has 160 credit unions that serve nearly900,000 members.