MANILA – The House of Representatives on Tuesday approved on second reading a bill that would define the tax rates for proprietary schools to allow them to avail of the 10-percent preferential rate on taxable income.
The chamber passed through voice voting House Bill No. 9913, which seeks to clarify that the preferential tax rate of 10 percent imposed on proprietary educational institutions will be reduced to one percent from July 1, 2020 to June 30, 2023, after which the tax rate shall be set to 10 percent under the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE).
Albay Rep. Joey Salceda, author of the bill, said this will constitute a 96 percent tax discount to private schools from 2020 to 2023, and a 60 percent tax discount thereafter.
“That is the largest ever tax cut to any sector ever in the country’s history, and I am proud that we will do it for the sector the Constitution values the most – the education sector,” Salceda added.
The bill is meant to intervene in the implementation of the recent regulation of the Bureau of Internal Revenue (BIR), increasing the tax rate of private educational institutions to 25 percent from 10 percent.
“Unless legislative action is taken, these schools will be applied a rate of 25 percent or the regular CIT (corporate income tax) rate, from the 10 percent some of them have complied with previously, if not now, then at some future point,” according to the official.
He noted that the BIR has suspended the implementation of Revenue Regulation No. 5-2021, which would have increased the income tax of private schools from 10 percent to 25 percent by defining proprietary educational institutions as private and non-profit entities.
Salceda stressed the need to immediately pass the bill to help private schools hire more teachers and keep existing staff through tax relief.
Applying the reduced one percent preferential rate under CREATE until 2023 would also allow schools to save an equivalent of 3.43 percent of compensation expenses, which could help them rehire at least 12,996 teachers at the start of the next school year.
Salceda also expressed hope that the bill can be transmitted to Malacañang for President Rodrigo Duterte’s signature before the year ends.(PNA)
