MANILA - A looming 150 percent increase in corporate income tax for private schools will lead to tuition hikes if not the shutdown of schools, a group of private schools warned Friday.
The Coordinating Council of Private Educational Associations of the Philippines warned that more private schools may shut down following the issuance of BIR's Revenue Regulation 5-2021, which increases the tax rate for proprietary educational institutions from 10 to 25 percent.
"Sigurado (Certainly), the cost of education will go up... Kung hindi man magsara (If it will not close down), it will drive the cost higher," Cocopea managing director Joseph Noel Estrada told Teleradyo's "Sakto".
Data from the Department of Education as of September 2020 showed that nearly 900 private schools had suspended their operations due to the pandemic, when many families struggled financially.
Cocopea, which represents about 2,500 private schools and education stakeholders, has asked the Court of Tax Appeals to stop the implementation of the BIR regulation.
The petitioners opposed a provision in RR No. 5-2021 which inserted the phrase "non-profit" in the definition of PEIs. They argued that the new BIR regulation was inconsistent with Sec. 27 (B) of the Tax Code because the term "non-profit" only pertained to hospitals.
Several senators have also urged the BIR to rescind the policy, which is feared to lead to more school closures.
Malacañang, however, said it supports the BIR regulation, saying it followed the original definition of the Tax Code when it crafted the new ruling.
Estrada said the BIR's regulation runs counter to Republic Act 11534 or Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, which grants a temporary reduction of the concessionary income tax rate of proprietary educational institutions (PEIs) from 10 percent to 1 percent for the next 3 years.
He lamented that private educational institutions did not receive government subsidy during the coronavirus pandemic as it faces financial losses and dwindling enrollment.
"Wala pong direktang subsidy sa mga eskuwelahan... Except of course 'yong mga loans, utang naman po 'yon. Hindi naman talaga 'yon tulong," he said.
(There's no direct subsidy to schools... Except of course the loans, which are still debts. It's not really help.)
However, he noted that students and school employees have received pandemic aid from the government.