An education advocacy group on Sunday thanked the Bureau of Internal Revenue for stopping the implementation of a controversial regulation that would have increased the amount of income taxes paid by private schools by 150 percent.
“Nagpapasalamat tayo sa BIR sa pagsuspinde ng regulasyong ito. At a time when all schools are reeling from the pandemic’s effects, private schools would have been placed at a disadvantage when they also deserve support from the government,” Marie Paz T. Abante, president of the Philippine Educators Alliance for Community Empowerment (PEACE) Party-list, said.
On Wednesday, Finance Sec. Carlos Dominguez III and the BIR issued issued Revenue Regulation No. 14-2021, which suspended certain provisions of RR No. 5-2021 that the bureau issued last April.
“More schools would have been closed and jobs lost because it’s a tall order to be able to pay that rate under these extraordinary circumstances.”
In particular, it scrapped the limitation imposed by RR 5-2021 which stated that the income tax exemption and the preferential income tax rate provided by the Corporate Recovery Tax Incentive for Enterprises (CREATE) Law only to non-profit and non-stock educational institutions.
“Had it pushed through, RR 5-2021 would have slapped a 25 percent corporate income tax on private schools, raising the rate by 15 percent. More schools would have been closed and jobs lost because it’s a tall order to be able to pay that rate under these extraordinary circumstances,” said Abante.
The said regulation had come under fire from various sectors, with the Coordinating Council of Private Educational Associations of the Philippines (Cocopea) saying it would result in additional costs not only for the schools but also for parents and students.
Lawmakers had also opposed the provision, saying it was contrary to the CREATE Law’s aim to help soften the blow of the pandemic.
Abante said that the BIR “made the right decision.”
“It speaks a lot about the BIR’s leadership that they are willing to listen and are not averse to changing their position for the public welfare,” she added.