Solon decries BIR's "unconscionable" decision to hike taxes on private schools

Published June 10, 2021, 7:07 PM

by Ben Rosario

The chairman of the House Committee on Technical Education on Thursday, June 10, decried as “unconscionable” the decision of the Bureau of Internal Revenue to impose on private schools a 150 percent increase in taxes.

Baguio City Rep. Mark Go chided the BIR’s decision which enjoys the support of Malacanang.

Go filed House Resolution 1877 to call on the revenue agency to revoke the imposed tax hike which the BIR said is based on the recently-signed Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.

Go, reportedly one of the co-authors of CREATE, who insisted that the BIR made a wrong interpretation of provisions of the law.

He said “it would be unconscionable to impose heavier tax burden upon private educational institutions during these trying times.” In HR 1877, Go cited the bureau’s Revenue Regulation No. 6-2021 issued on April 8 that implemented the rules on the new income tax rates of corporations under the CREATE Law.

The BIR has decided to impose 25 percent hike for private schools owned by corporations.

The revenue agency’s circular also restricted proprietary educational institutions to non-profit schools, thus excluding other private schools from enjoying the preferential tax treatment granted prior to the enactment of CREATE Law.

Before the CREATE Law, proprietary educational institutions were granted preferential tax treatment of ten percent.

Go stressed that the CREATE Law’s intention is to “reduce taxes of private schools to one percent between July 1, 2020 to June 30, 2023 before reverting to the 10 percent tax in July 2023.

The administration solon said the CREATE Law does not distinguish between non-profit and other private schools when it comes to tax treatment.

He pointed out that the law was “crafted to ease private schools’ financial woes after the pandemic caused an economic downturn.” “The need to comply with the government policy of flexible learning resulted in severe financial constraints, leading many private educational institutions to let go of some employees and even cease operations,” the Baguio City solon said.