‘BIR’s 25-percent tax on schools illegal’

House Deputy Speaker Rep. Rufus Rodriguez has sought to amend the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law signed last March by President Rodrigo Duterte to clarify taxation on schools under the measure.

Rodriguez’s House Bill 9577 aims to amend a provision of the National Internal Revenue Code which the Create Law revised.

He said he wants to make it clear that the preferential tax rate of 10 percent applies to proprietary educational institutions after the Bureau of Internal Revenue (BIR) slapped them with a 25-percent tax.

“With the bill, I hope the BIR will see that the intent of the law is to give all proprietary educational institutions a preferential tax of 10 percent, which from 1 July 2020 to 30 June 2023 is 1 percent,” the lawmaker said.

“It will address the current situation brought about by the BIR regulation and will help our private schools,” he added.

If BIR will continue to implement the 25 percent tax, the congressman projected that many private schools might be forced to close down, especially with the current flexible learning system.

“More schools will be forced to close down or raise their tuition and other fees to the detriment of our students and their families,” he said.

Citing data obtained from the Department of Education for academic year 2020 to 2021, enrolment in private K-to-12 schools dropped by over 900,000 compared to the previous school year.

The Coordinating Council of Private Educational Associations, he added, has also reported that half of its members suffered a decline in enrollment.

“The implementation of the K-to-12 program already hit a lot of private schools. Then Covid-19 struck, resulting in many more schools closing down because of financial difficulties,” Rodriguez lamented.

“Instead of helping these educational institutions, the BIR has made their situation worse by increasing their tax by 150 percent, from 10 percent to 25 percent,” he added.

Rodriguez pointed out that the action of the BIR is illegal as it is “contrary to the 1987 Constitution.” He also called on Department of Finance Secretary Carlos Dominguez III to revoke the new tax regulation.

Rep. Rodriguez files bill to amend CREATE law to clarify that propriety educational institutions must only be charged 10 percent in taxes.

“The State shall give priority to education, (Sec. 17, Art. II); The State shall protect and promote the right of all citizens to quality education at all levels and shall take appropriate steps to make such education accessible to all, Sec. 1, Article XIV,” he cited.

“The State recognizes the complementary roles of public and private institutions in the educational system, Sec 4(1), Art. XIV; and Proprietary Educational institutions xxx may likewise be entitled to such exemptions (from taxes and duties) subject to the limitations provided by law, Sec. 4(3), Art XIV,” he added.