Salceda intervenes to help private schools avail of 1% tax under CREATE

House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) assured the country’s private schools operating for profit that he had secured, in their favor, the support commitment of the Bureau of Internal Revenue for the “revision and reconconciliation, by legislation, of the ambiguities in certain tax laws” and the newly enacted Corporate Recovery and Tax Incentives for Enterprises Act.

The ambiguities were highlighted by the recent BIR “Revenue Regulations Series of 2021” guidelines which raised the tax rate for private educational institutions based on a 2016 Supreme Court ruling on certain tax laws, and the new CREATE Act which reduced corporate income tax to 25 percent initially, and progressively to 20 percent by 2030.

Salceda assured private schools will “be able to avail of the 1 percent tax rate from July 2021 to 2023, and ‘my committee will initiate needed revisions and changes in the law.” He said unforeseen tax liabilities incurred when the Supreme Court suddenly changed the tax regime for private schools in 2016 will not be held against them.

“Hopefully, this will help public schools keep the teachers they have, and hire more when the economy gets better. So, it’s a clean slate legally, and lower taxes moving forward,” he said, following his meeting on Wednesday with officials of the BIR and the Department of Finance (DOF) to realign the applicable tax rate imposed on private schools that are for-profit.

Salceda presided over the consultation meeting held in response to an appeal from the Coordinating Council of Private Educational Associations of the Philippines, the country’s umbrella organization for private schools, to help affected members address issues relative to the implementation of the new BIR tax guidelines.

The lawmaker vowed to reconcile and make clear the ambiguities in the tax laws so private schools will be able to avail of the 1 percent tax rate up to 2023 under CREATE; and they will not be held liable for the regular tax rate which the BIR says they are compelled to implement by the Supreme Court ruling on the issue.

The COCOPEA sought Salceda’s help on the matter particularly on the BIR’s implementation of its new revenue regulations. It has also appealed to President Duterte “to make our tax laws consistent with your vision and the constitutional mandate of ensuring access to education for all Filipinos.”

The group specifically pointed out that RR S.2021 “has unilaterally and illegally inserted the phrase ‘inconsistent with both Section 27 (of the Tax Code as amended by the CREATE Law,’ and the constitution."

In response, Salceda said he was able to “secure BIR’s commitment on COCOPEA’s request, and his committee will hear the revision proposals during the legislature’s session break so they can submit to the Senate an approved version once session resumes.

“We will hear the proposals 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 resolving this issue given the limited government assistance extended to private schools,” Salceda said.

“There will still be reasonable safeguards. For example, private schools’ revenues have to be mostly from education. So, if they earn from a merchandise shop or rental income, that should not exceed their actual income from teaching,” he said.

“Ultimately, the principle is that because the state constitutionally recognizes the value of education, we cannot unduly burden schools with taxes,” Salceda said.

Topics: Joey Sarte Salceda , Bureau of Internal Revenue , Coordinating Council of Private Educational Associations of the Philippines , CREATE Law
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