‘New tax law to help schools stay afloat’

SEN. Sherwin Gatchalian on Monday said the new law granting tax relief to private schools will help them stay afloat amid the devastating effects of the pandemic.

President Rodrigo Duterte signed into law Republic Act (RA) 11635 on Dec. 10, 2021. It amends the National Internal Revenue Code of 1997 to reduce the preferential tax rate of 10 percent to 1 percent imposed on proprietary educational institutions.

“Due to the huge damage that the pandemic has inflicted on our private schools, they deserve all the support from our government,” Gatchalian said in Filipino.

“That’s why the [enactment of the] law that will reduce their taxes until 2023 is very timely to help them recover and continue to provide quality education,” the reelectionist senator added.

While RA 11635 provides that proprietary educational institutions should pay a 10 percent tax on their taxable income, the 1 percent tax rate should be imposed between July 1, 2020 until June 30, 2023, he said.

The law defines proprietary educational institutions as any private school maintained and administered by private individuals or groups and with a permit to operate from the Department of Education (DepEd), the Commission on Higher Education, and the Technical Education and Skills Development Authority.

Gatchalian stressed that RA 11635 clarified and reinforced the intention of the Corporate Recovery and Tax Incentives for Enterprises Act to provide relief to private schools.

He noted that the Bureau of Internal Revenue came up with Revenue Regulation 5 which said that an educational institution can avail of the lower tax rate if it is proprietary and nonprofit.

For schools that do not meet the category, a 25 percent rate would be imposed, an equivalent of a 150 percent increase, said the chairman of the Senate Committee on Basic Education, Arts and Culture.

“The heavier burden could result in more schools suspending operations or closing down, more job losses, and more learners losing access to quality education,” Gatchalian said in a statement.