Private schools oppose BIR's 'damaging' tax policy

posted June 03, 2021 at 07:52 pm
by  Manila Standard Business
Private schools protested what they called illegal and discriminatory insertion in a Bureau of Internal Revenue tax policy that will harm the whole private education sector.

Coordinating Council of Private Educational Associations of the Philippines managing director Atty. Joseph Noel Estrada, in a statement, called for the immediate rectification of BIR Revenue Regulation 5-2021 which increases the tax rate for proprietary educational institutions from 1 percent to 25 percent,

COCOPEA, an umbrella organization of five leading private education associations, issued the statement on behalf of 2,500 private educational institutions and education stakeholders nationwide and called the BIR tax regulation “damaging, discriminatory and illegal”.

Estrada said RR 5–2021 would cause irreparable damage to the institutions and stakeholders that the Duterte administration and Congress sought to help, by more than doubling their tax rate from the 10 percent that has been applied to them since 1968, to 25 percent.

This contrasts with the CREATE Act’s provisions, which seek to provide temporary reduction of the 10-percent tax rate of private schools to 1 percent during the pandemic, he said.

“The unintended consequence of RR 5-2021 is to impose a very heavy burden on the private education sector at a time when schools are already struggling to survive as a result of first, the K-to-12 Act, and now the pandemic,” Estrada said.

“The immediate impact will be seen in a sharp reduction of investments in classroom capacity and scholarships. The longer-term impact of RR 5-2021 would be that faculty and personnel are at greater risk of losing their jobs, and even the communities and small businesses built around schools [e.g., dormitories, janitorial and security services, uniform sewers, carinderias, sari - sari stores and school bus services] will be significantly affected,” Estrada said.

Estrada said “the BIR’s arbitrary move to enforce a 15-percent increase in the tax rate during this deep recession is ill-conceived and insensitive to the realities of the education sector.”

Citing data from the Department of Education and Commission on Higher Education, Estrada said there are over 6.1 million students enrolled in 4,125 private educational institutions, over 300,000 faculty and staff in the basic education units of the private educational institutions and about 100,000 in higher education.

“The spirit of the CREATE Act as envisioned by Congress and the Duterte administration should not be allowed to be set aside by the BIR RR 5-2021. What the BIR cannot do directly, it cannot do indirectly. RR 5-2021, as an administrative issuance, cannot amend a law passed by Congress,” he said.

Estrada said a petition signed by over 600 private educational institutions, faculty groups, alumni associations and parent-teacher associations was sent to the Department of Finance and the Bureau of Internal Revenue.

“We therefore call on our tax authorities to exercise their taxing power with fairness and equity, and in accordance with both the CREATE Act and the Constitution, by immediately rectifying the erroneous insertion in RR 5-2021.” Estrada said.

Topics: COCOPEA , BIR , Revenue Regulation 5-2021 , tax rate , private schools
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