Opposition Senator Leila de Lima has joined other lawmakers in calling for the suspension of the new tax scheme imposed on private schools.

In filing Senate Resolution No. 766, De Lima urged the Duterte administration to cancel the 25 percent corporate income tax on private schools imposed by the Bureau of Internal Revenue (BIR).

The senator said Duterte should suspend the implementation of BIR’s Revenue Regulation (RR) No. 5-2021, which, in effect, canceled the 1% rate offered by the pandemic rescue package under Republic Act No. 11534, or the “Corporate Recovery and Tax Incentive for Enterprises (CREATE) Act.”

De Lima noted that the BIR "took it upon itself to modify what was not intended to be modified."

“In issuing implementing regulations to enforce provisions of the CREATE Act, the implementing agency must be guided by the purpose for which the measure was legislated,” De Lima said.

“What was meant to be a form of assistance into an oppressive provision that could lead educational institutions to the brink of extinction,” she added.

Section 6 of the CREATE Act amended Section 27 of the National Internal Revenue Code of 1997 (NIRC), thereby granting a tax rate of 1 percent starting July 1, 2020 until June 30, 2023 to Proprietary Educational Institutions which are non-profit.

De Lima, who chairs the Senate Committee on Social Justice, Welfare and Rural Development, said “misinterpreting what was otherwise plain and clear runs contrary to the intent of the law and cuts through its very soul."

“Private schools are the State’s allies which assist it in carrying out the duty to educate the youth in whose hands the future of this nation depends on," she said.

"In unduly withdrawing a legislative grant, the disastrous consequences will be so far-reaching that it would essentially lead educational institutions to their demise,” she added.

She said it is clear that the BIR overstepped its limits and usurped legislative powers when it inserted the modifier “non-profit schools” in the regulation.

“While the power to tax has been said to be the power to destroy, the said power must be used justly and not treacherously in order to maintain the public’s trust and confidence in the government. It must still be exercised with caution to minimize the injury to the proprietary rights of taxpayers,” she said.

De Lima also said it behooves upon the Senate to appeal to the President to suspend the implementation of the BIR's RR No. 5-2021 while Senate Bill (SB) No. 2272, which seeks to further amend a section of the NIRC to address BIR’s faulty interpretation of a provision under CREATE, is being discussed.

“The Senate from which this measure emanated from, and whose intent runs through the veins of the said measure, must assert the spirit of the law," she said

"It should not stand idly by while executive agencies substitute the Senate’s will and purpose much to the detriment of the people,” the lawmaker emphasized.