Angara welcomes DOF, BIR's suspension of private school tax
Senator Sonny Angara on Thursday, July 29 welcomed the decision of the Department of Finance (DOF) and the Bureau of Internal Revenue (BIR) in suspending the implementation of the new tax regulations on private schools and giving Congress sufficient time to fix the confusion caused by the law.
“Thank you (Finance) Secretary (Carlos) Dominguez for heeding the clamor of private educators who share with government the burden of teaching our youth," Angara said regarding the suspension of Revenue Regulation No. 5-2021 pertaining to tax on schools.
"This is what I call a taxation timeout. Now, the ball is on the court of Congress to permanently fix the confusion caused by the language of that law,” Angara said.
Private school organizations have earlier raised concerns about the impact of RR 5-2021 on its members, many of which have been struggling to stay afloat during the pandemic.
They've said that an increase in their tax rate could force more schools to close since many of them are already experiencing financial difficulties.
In response, the BIR, on Monday, issued Revenue Regulations No. 14-2021, suspending the implementation on the definition of Proprietary Educational Institutions (PEIs), insofar as it includes the phrase “which are non-profit”; on the definition of non-profit insofar as it applies to PEIs; and which provides illustration on the tax treatment of PEIs that are non-profit.
The new regulation recognized the need to ease the burden of taxation among PEIs "especially during this time of a COVID-19 pandemic."
The new BIR regulation also took note of the various measures that have been filed to clarify the tax imposed on schools under the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE).
One of these measures is Senate Bill No. 2272 which Angara filed to clarify the position on preferential tax rates for PEIs and for non-profit hospitals.
"Reading the new revenue regulation, it is clear that the executive merely granted a reprieve. Permanent respite will come from Congress," he said.
"I have already filed the bill to amend and clarify the confusion provision under the law. Let's expedite its passage," said Angara, who chairs the Senate Finance Committee.