House Committee on Higher and Technical Education chair and Baguio City representative Mark Go filed Tuesday, June 8 a resolution urging the Bureau of Internal Revenue (BIR) to revoke the imposed tax hike of 150 percent on private schools.
In House Resolution (HR) 1877, Rep. Go cited the bureau’s Revenue Regulation No. 5-2021 issued on April 8. This implemented rules on the new income tax rates of corporations after the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act was signed into law this year.
The BIR seeks to increase taxes for private schools owned by corporations to 25 percent. Prior to the regulation, proprietary educational institutions were granted a preferential tax treatment of 10 percent.
Meanwhile, Rep. Go argued that the intent of the CREATE Law is to reduce the taxes of private schools to 1 percent between July 1, 2020 to June 30, 2023 before reverting to the 10 percent tax in July 2023.
In its circular, the BIR limited proprietary educational institutions to non-profit private schools, excluding other private schools from enjoying the preferential tax treatment.
According to the Baguio lawmaker, the CREATE Act does not distinguish between non-profit and other private schools when it comes to tax treatment. He added that the law was crafted to ease private schools’ financial woes after the pandemic caused an economic downturn.
The higher education committee chairman said that private schools were among those severely hit by the pandemic, losing a total of 2 million student enrollment for academic year 2020-2021.
Go stressed that “it would be unconscionable to impose heavier tax burden upon private educational institutions during these trying times.”
“The need to comply with the government policy of flexible learning resulted in severe financial constraints, leading many private educational institutions to let go of some employees and even cease operations”, Rep. Go added. ###