Private schools press for amendment to take away BIR discretion on preferential tax rates

PHILIPPINE STAR/ MIGUEL DE GUZMAN

PRIVATE SCHOOLS said the Senate needs to approve within the month an amendment to the tax code which explicitly makes the industry qualified to enjoy preferential tax rates, in order to avoid any situation in which the Bureau of Internal Revenue (BIR) can declare them ineligible for tax relief.

Senate Bill (SB) No. 2272, which amends Section 27 (B) of the National Internal Revenue Code will effectively clarify that the industry is entitled to a preferential tax rate as provided for by the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act. CREATE allowed private schools to pay a rate of 1% between July 2020 and June 2023 as a form of pandemic relief.

The private schools said in a joint statement Tuesday that the amendment will “rectify with finality the flawed interpretation of a provision under the CREATE Act by the BIR’s Revenue Regulations 5-2021.”

As of Monday, the enrollment in private schools was 1.4 million, down 57% from a year earlier, and 66% of the 4.3 million in 2019, according to the Department of Education’s Learning Enrollment Survey Quick Count data.

The study also indicated that most private schools do not expect a substantial number of late enrollees, as classes in public schools have also begun, while many private school students are expected to transfer to public schools due to economic difficulties.

Albay Rep. Jose Ma. Clemente S. Salceda, chairman of the House Committee on Ways and Means, has said that a BIR interpretation that renders the industry ineligible for tax relief could force the already weakened sector to shed another 21,661 jobs.

On the other hand, applying the CREATE rate of 1% until 2023 would allow schools to rehire at least 12,996 teachers for the beginning of the school year, he added.

Senator Pilar Juliana S. Cayetano last month promised to expedite the passage of SB 2272. Also in August, the House version of the bill passed on third and final reading.

“Private schools are the government’s partner in education. This partnership is even more important today, as our nation deals with the COVID-19 pandemic, which has disrupted our educational system,” Ms. Cayetano said last month.

“The country’s human capital depends on the quality of education our learners receive from both public and private educational institutions,” private school associations said in a statement Tuesday.

“This is a complementary role that must be strengthened and will prove critical for recovering from the pandemic, and sustaining Philippine economic growth and global competitiveness,” they added.

Signatories to the statement were Joseph Noel M. Estrada, managing director of the Coordinating Council of Private Educational Associations (COCOPEA) and Anthony Jose M. Tamayo, chairman of COCOPEA and president of the Philippine Association of Colleges and Universities. — Alyssa Nicole O. Tan

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