Senators on Thurday, July 29, again called for an amendment of the country’s tax code to provide a “permanent” solution to the erroneous interpretation of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
Senate President Pro Tempore Ralph Recto issued the appeal even as he welcomed the Department of Finance’s (DOF) suspension of the Bureau of Internal Revenue (BIR) ruling excluding proprietary educational institutions from the reduced income tax rates under CREATE.
“The order suspends the collection of the tax. The permanent solution, however, will be in the form of a law purging all ambivalence in that provision of the Tax Code,” Recto said in a statement.
“Still, it is a welcome move and I thank the good Secretary of Finance for this order, which would help ease the distress the private schools are going through during this pandemic,” he added.
The Senate leader reiterated his call for the passage of a “simple, corrective bill so there will be a closure to the issue, leaving no room for erroneous interpretation, which may tempt future administrations to invoke.”
“This is one problem partially solved. Let us move forward by adopting measures that will address the crisis in the entire educational system which the pandemic has worsened,” he added.
Senator Joel Villanueva, chairperson of the Senate Committee on Higher Education, likewise underscored the importance of making permanent the suspension of BIR’s rule.
“Ito po ang kailangan natin na ‘academic revenue freeze.’ Dagdag na tulong, hindi dagdag na tax ang kailangan ng mga pribadong paaralan sa panahon ng pandemya (We need this academic revenue freeze. Private schools need more assistance, not taxes during the pandemic),” Villanueva said, also thanking the DOF.
“The challenge now is on the House and the Senate to pass the amendatory bill. The revenue regulation is a conditional freeze. It is up to the legislature to make it permanent,” he added.
Several senators earlier slammed the BIR for issuing the Revenue Regulation 5-2021, which imposes a tax rate of 25 percent on private schools, which was an increase from the 10 percent they enjoyed pre-pandemic.
Lawmakers said the BIR made an “erroneous” interpretation of the CREATE law, which actually sought to bring down the tax rate to one percent.
Senator Juan Edgardo Angara, last June, filed Senate Bill No. 2272 that would amend the National Internal Revenue Code to correct this supposed misreading.