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MANILA – A group of private schools in the Philippines urged the Senate to pass a counterpart law that would make them qualify for a preferential 10% preferential income tax rate under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.

On August 2, the House Ways & Means Committee passed a bill that would allow proprietary educational institutions to avail of a 10% tax rate under the CREATE law.

It is expected to be discussed in the plenary once the lower House returns to session after the ECQ.

“We feel confident because the Speaker of the House, Lord Allan Velasco, said education should be a priority measure of the House. That’s why we are grateful to Cong. Joey Salceda and the 74 other solons who immediately supported this swift action,” Coordinating Council for Private Educational Associations of the Philippines (COCOPEA) Chairman Anthony Tamayo told ANC’s “Rundown.”

Tamayo also said he has spoken with Senate Ways and Means Committee Chair Pia Cayetano, who said the bill would be an “easy pass” in the Senate.

The CREATE Act, signed by President Rodrigo Duterte in March, aims to cushion the COVID-19 pandemic's impact on struggling businesses. Schools' tax rates were reduced from 10 percent to 1 percent from July 1, 2020 to July 23, 2023 under the law.

However, new regulation by the Bureau of Internal Revenue raised the income tax rate of private educational institutions by 150 percent.

The regulation also said educational institutions must be "non-profit" to avail of tax relief.

The Palace backed the regulation, saying Finance Secretary Carlos Dominguez III noted that BIR followed the original definition of the Tax Code when it crafted the new ruling.

• Palace backs tax hike on private schools

COCOPEA went to court to argue that the new BIR regulation was inconsistent with Sec. 27 (B) of the Tax Code.

The group also said that the increase in corporate income tax for them will lead to tuition hikes, if not the shutdown of schools.

• Tuition hikes loom due to tax hike, says group

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.

• More senators urge BIR to revoke tax hike on private schools