Bill lowering tax rates for proprietary schools gets Lower House nod

The House of Representatives on Monday, August 23 passed on third and final reading the bill that proposes to define tax rates for proprietary schools in order to allow them to avail of the 10-percent preferential rate on taxable income.


With all 203 members present voting in the affirmative the chamber approved House Bill 9913 that will also grant propriety schools the privilege to avail of the 1% special tax rate until 2023.

Enactment of the bill will put an end to the controversy caused by the passage of the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE).

HB 9913 will clarify the preferential tax rate of ten percent imposed on propriety educational institutions which will be reduced to just one percent from July 1, 2020 to June 30, 2023.

After this, the tax rate will be set to ten percent under the CREATE law.

Albay Rep. Joey Salceda, chairman of the House Committee on Ways and Means, said this will constitute a 96 percent tax discount to private schools from 2020 to 2023, and a 60 percent tax discount thereafter.

Salceda is joined by Deputy Speaker Rufus Rodriguez (2nd District, Cagayan de Oro City); Luis Raymond Villafuerte Jr. (2nd District, Camarines Sur); Joy Myra Tambunting (2nd District, Parañaque City) and Mark Go (Baguio City) as co-authors of the bill.

"That is the largest ever tax cut to any sector ever in the country’s history, and I am proud that we will do it for the sector the Constitution values the most – the education sector,” Salceda stated.

In a press statement, Gabriela Partylist Rep. Arlene Brosas lauded the passage of the measure, saying that she hopes the Senate will pass the measure soon.

“The approval of the bill clarifying the tax rate on proprietary educational institutions is highly necessary to stave off further retrenchment and worse cost-cutting among pandemic-hit private schools,” said Brosas.

“This is the much-needed correction to the syntactical conundrum under the CREATE Law, which implies that only non-profit schools can benefit from the preferential tax rate of 1 percent until 2023,” Brosas said in explaining her 'yes' vote to the measure.

Salceda explained that the bill will address the controversial implementation by the Bureau of Internal Revenue of a regulation adjusting the tax rate of private educational institutions from ten percent to 25 percent.

“Unless legislative action is taken, these schools can still be applied a rate of 25 percent or the regular CIT (corporate income tax) rate, from the 10 percent some of them have complied with previously, if not now, then at some future point,” he explained.

While the BIR has suspended the implementation of Revenue Regulation No. 502021 which had hiked the income tax of private schools, there remains the necessity to pass HB 9913.

“Although the rule was suspended, their responsibility under the law has not yet been expunged. So, we still have to address that complication. Besides, they are unable to avail of the 1% rate,” Salceda stated.