Press Releases

Salceda intervenes to aid private schools with corrected corporate tax rate

June 9th, 2021

Salceda intervenes to aid private schools with corrected corporate tax rate; to allow schools to avail of 1% tax on income under CREATE

House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) set a meeting with the Bureau of Internal Revenue (BIR) and the Department of Finance (DOF) on Wednesday to align the tax agency’s position on the applicable tax rate for private schools that are for-profit.

Salceda called the urgent briefing in response to a request from the Coordinating Council of Private Educational Associations of the Philippines (COCOPEA), the country’s umbrella organization for private schools. COCOPEA appealed for Salceda’s intervention on the applicable tax rate for for-profit private schools.

COCOPEA asked Salceda to intervene in the implementation of the new regulation of the Bureau of Internal Revenue (BIR) increasing the tax rate of private educational institutions.

“We appeal to you, Mr. President, to make our tax laws consistent with your vision and the constitutional mandate of ensuring access to education for all Filipinos. Specifically, Revenue Regulation (RR) 5-2021 unilaterally and illegally inserted the wording inconsistent with both Section 27 (B) of the Tax Code as amended by the Corporate Recovery and Tax Incentives for Enterprises (Create) Law, and the constitution,” the group said in a statement.

In response, Salceda says that during the meeting, he was able to “secure from the BIR a commitment of support for the revision by legislation of the ambiguities in the law so that, one, they will be able to avail of the 1% tax rate up to 2023; and two, they will not be held liable for the regular tax rate of 30% which the BIR says they were constrained by the Supreme Court to implement.”

“So, it’s a clean slate legally, and lower taxes moving forward,” Salceda added.

Tax panel to approve legislation in principle

Salceda says that his committee will hear the proposal in principle during the break so that they can submit to the Senate an approved version once session resumes.

“We will hear the proposal and approve it in principle during the break. The House is united in making sure this issue is resolved soon. We are especially keen on doing this given the limited government assistance extended to private schools,” Salceda said.

“There will still be reasonable safeguards. For example, their revenues have to be mostly from education. So, if the school earns from, say, a merchandise shop or rental income, that should not exceed their income from actually teaching,” Salceda explained.

“But ultimately, the principle is that because education is constitutionally recognized as a value of the State, we cannot unduly burden schools with taxes,” Salceda added.

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