Group warns of more school closures due to tax hike


Posted at Jun 04 2021 12:58 PM

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MANILA— A group of private schools on Friday warned more schools may shut down following a new regulation issued by the Bureau of Internal Revenue that more than doubles their tax rate.

Lawyer Joseph Noel Estrada, managing director of the Coordinating Council of Private Educational Associations of the Philippines, said the BIR's Revenue Regulation 5-2021 would increase the tax rate for proprietary educational institutions from 10 to 25 percent.

"Hindi pa kami nagbibilang pero talagang nangangamba na malawakan ang effect nito. Marami talaga ang mapipilitang magsara," he told Teleradyo.

(We are worried this would cause irreparable damage. Many will be forced to close.)

"Nahirapan na nga tayo sa pandemya. 'Yong iba do'n hindi na nga nata-tax, napilitan pang magsara. Paano pa kaya kung bubuwisan tayo ng 150 percent increase?" he added.

(We are already struggling because of the pandemic. Others who were not taxed shut down. How much more if those taxed with a 150 percent increase?)

Data from the Department of Education as of September 2020 showed that more than 800 private schools had suspended their operations due to the pandemic, when many families struggled financially.

Estrada said the BIR regulation, which was issued on April 8, also contradicted the recently enacted Republic Act 11534 or the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE), which grants a temporary reduction of the concessionary income tax rate of proprietary educational institutions from 10 percent to 1 percent for the next 3 years.

"Kabaligtaran. Kung ano ang binibigay ng CREATE, binabawi ng BIR at dinodoble pa," he said.

(It's the opposite. BIR reverses and doubles the tax rate than what CREATE gives.)

Estrada said private schools have been subjected to a 10-percent tax rate under Section 27 (B) of the Tax Code since 1968 for its role in the country's education system.

Cocopea, which represents about 2,500 private schools and education stakeholders, had written to BIR to rectify the regulation.

"RR 5-2021 is ill-conceived and insensitive to the realities of the private education sector," the group said in a statement issued Tuesday.

Estrada said the BIR has confirmed that private schools were not entitled to preferential tax treatment of 1 percent under the CREATE Law and the 10-percent tax rate under the Tax Code.