Senate asked to look into increased tax rate on private schools

Published June 5, 2021, 4:38 PM

by Vanne Elaine Terrazola

Senator Sherwin Gatchalian on Saturday, June 5, called on the Senate to exercise its oversight function and look into the Bureau of Internal Revenue’s (BIR) regulation seeking to increase the tax rate of private schools.

Senator Sherwin Gatchalian during a special session in the Senate on March 23, 2020. (Henzberg Austria/Senate PRIB)

The chairman of the Senate basic education committee made the appeal as he joined his colleagues in slamming the BIR’s issuance of its Revenue Regulation (RR) 5-2021, which would raise the tax of proprietary educational institutions from 10 percent to 25 percent.

“At a time when private schools are struggling to stay afloat amid the COVID-19 pandemic, the imposition of a 25 percent corporate income tax is not only ill-timed and insensitive. It goes counter to the intention of Republic Act 11534 or the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) Law, which sought to reduce proprietary educational institutions’ income tax rate to one percent in the next three years,” Gatchalian said in a statement.

Senators said BIR made an “erroneous” interpretation of the CREATE Law to impose, thru the RR 5-2021, a condition that a proprietary educational institution should be non-profit before it can avail of the reduced rate.

“This should prompt the Senate to exercise its oversight powers because private schools will now have to pay higher instead of lower rates,” Gatchalian said.

He said he would also propose further amendments to the National Internal Revenue Code (NIRC), to protect private schools from the potential consequences of such policy, especially during the pandemic. Senator Juan Edgardo “Sonny” Angara earlier filed a bill on the matter.

“Tulong, hindi dagdag na pasanin ang kailangan ng ating mga pribadong paaralan sa panahon ng krisis na kinakaharap natin (Our private schools need assistance, not addition burden, at a time of crisis),” Gatchalian pointed out.

He noted that in the March 2021 Labor Force Survey by the Philippine Statistics Authority, the education sub-industry reported the largest decrease in the number of employed persons at 248,000.

Groups of educational institutions, as well as lawmakers, have asked the government to revoke the RR 5-2021.