Private schools’ tax concern not urgent—DOF

Published June 7, 2021, 7:00 AM

by Chino S. Leyco

The Department of Finance (DOF) has shrugged off appeals to reverse a Bureau of Internal Revenue (BIR) regulation increasing the tax rate on private education institutions.

Finance Secretary Carlos G. Dominguez III said the Coordinating Council for Private Educational Associations’ (COCOPEA) appeal to rectify BIR Revenue Regulation (RR) 5-2021 is not urgent.

Finance Secretary Carlos G. Dominguez III (DOF photo)

“There’s no urgency to change the RR [5-2021] at the moment,” Dominguez told reporters. “The quarterly income tax returns that the schools have to file are provisional. Final returns for 2021 are due next year.”

On Friday, June 4, the association of private schools sought intervention from President Duterte to reverse the tax bureau’s ruling barring for-profit educational institutions from availing of a 1 percent tax rate.

Separately, Senators Ralph G. Recto and Edgardo M. Angara called on the BIR to reverse its ruling, which also doubled private schools’ existing tax rate from 10 percent to 25 percent.

But Dominguez stood firm on BIR regulation, noting the bureau followed the original definition of the Tax Code when they crafted the new ruling.

However, the finance chief said the DOF and BIR would respect should the high tribunal and Congress decide to revise the BIR’s taxation ruling on private schools.

“As stated earlier, the RR is based on Supreme Court decisions and the Tax Code. We will however respect and implement any future decision of the Supreme Court or enacted legislation concerning this matter,” Dominguez said.

For this reason, he suggested that “it would be better if the law is amended so the issue is resolved once and for all. Any future Secretary of Finance or BIR Commissioner can bring up the issue again.”

COCOPEA earlier said the BIR regulation will cause “irreparable damage” to private education institutions as the bureau will more than double their existing tax rate.

“The erroneous provision of RR 5-2021 will add a heavy additional burden to the many stakeholders of the private education sector, at a time when we are already fighting for our survival,” the group said.

“Our sector has not yet recovered from the debilitating effects of the K-12 Law, and is in the midst of struggling with the steep drop in enrollment caused by the pandemic. RR 5-2021 will be the straw that breaks the camel’s back,” it added.