BusinessMirror

House okays on 2nd reading bill cutting private schools’ tax rate

- By Samuel P. Medenilla @sam_medenilla

THE bill providing tax cuts for private schools was passed by the House of Representa­tives on second reading on Tuesday.

House Bill (HB) No. 9913, authored by Albay second district Rep. Joey Sarte Salceda, will “reduce tax rates for proprietar­y schools and allow them to avail of the 10-percent preferenti­al rate on taxable income.”

Salceda said the House plenary

promptly approved the bill since the tax discount it provides will be beneficial for private schools and students.

“We will be watching them [private schools] to make sure this tax cut makes it into tuition reductions and hiring of new teachers,” he added.

If passed into law, HB 9913 is expected to provide the “largest ever tax cut to any sector ever in the country’s history.”

“This will constitute a 96-percent tax discount to private schools from 2020 to 2023, and a 60-percent tax discount thereafter,” Salceda said in a statement.

“I am proud that we will do it for the sector the Constituti­on values the most— the education sector,” he added.

Under HB 9913, a preferenti­al tax rate of 10 percent imposed on proprietar­y educationa­l institutio­ns will be reduced to 1 percent from July 1, 2020 to June 30, 2023, after which the tax rate shall be set at 10 percent under the Corporate Recovery and Tax Incentives for Enterprise­s Act (CREATE).

It is meant to intervene in the implementa­tion of the recent regulation of the Bureau of Internal Revenue (BIR), increasing the tax rate of private educationa­l institutio­ns to 25 percent from 10 percent. The schools had raised a howl over the BIR regulation, saying it contradict­s the spirit of the CREATE law, and will worsen the financial plight of pandemic-hit schools, resulting in more closures.

Salceda explained that without his proposed legislatio­n, private schools will be unable to avail of the tax relief and can be held liable for taxes paid since 2012, when a Supreme Court decision on the tax rate of such schools was issued.

He hopes HB 9913 will be signed by President Duterte before the end of the year to prevent such problems for private schools.

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