Speaker wants BIR to review tax exemptions for religious schools, citing high tuition
SPEAKER Pantaleon D. Alvarez has asked the Bureau of Internal Revenue (BIR) to review the tax returns of religious schools registered as non-stock and non-profit organizations, claiming that constant tuition increases call into question their non-profit nature.
The review is intended partly to clarify whether tax exemptions cover only non-commercial activities, to ensure no revenue leakage occurs.
During a committee hearing of the tax reform program at the House of Representatives yesterday, Mr. Alvarez ordered the BIR to review income tax returns filed by the institutions over the past three years.
He said they might not be paying the right taxes outside the exemption granted to them by law.
“We need to take a look at this. Anyone can declare that they are a non-stock and non-profit, just to escape tax obligations,” said Mr. Alvarez.
“I think its high time to tax those that need to be taxed,” he said in Filipino.
“These schools, they don’t cater to the poor. They always increase tuition fees. This means that they are not non- stock or non- profit organizations. They are profitable businesses. In fact, they are expanding. Why don’t you revisit their non-stock nonprofit status if they really are non-stock or non-profit organizations,” said Mr. Alvarez
“That is unfair to other schools. In fact, if you compare their tuition fees, theirs are greater compared to ordinary private schools not run by religious institutions,” he said.
According to BIR Commissioner Caesar R. Dulay, religious institutions, and church schools are exempt from income taxes on income generated directly from educational or religious operations.
“The revenue from tuition fees is not taxed. But they have revenue from commercial activities like rental of assets or property, those are taxed,” said Mr. Dulay.
Paragraph three, section four, Article XIV under the 1987 constitution states that “Charitable institutions, churches and parsonages or convents appurtenant thereto, mosques, non-profit cemeteries, and all lands, buildings, and improvements, actually, directly, and exclusively used for religious, charitable, or educational purposes shall be exempt from taxation.”
Paragraph three, section 28, Article VI also states: “All revenues and assets of non- stock, non- profit educational institutions used actually, directly and exclusively for educational purposes shall be exempt from taxes and duties.” —