House panel hopes to pass tax bill for private schools by end of Q3

The House Committee on Ways and Means said it will seek to approve a bill clearing up the ambiguity surrounding the eligibility of private schools to a 1% tax rate before the school year begins.

“We wish to settle the matter before the school year begins in June to August,” Jose Ma. Clemente S. Salceda, the committee’s chairman, said about his House Bill 9596.

The bill amends Section 27(B) of the National Internal Revenue Code of 1997, which would preclude the Bureau of Internal Revenue (BIR) from interpreting the CREATE law in a way that rules out private schools’ entitlement to the reduced tax rate.

Educational associations, headed by the Coordinating Council of Private Educational Associations, expressed their support for the bill.

The association welcomed “the relief that we need under the CREATE Act, so that we may be empowered to perform our role… in delivering quality education,” its Managing Director Joseph Noel M. Estrada said during the hearing.

Finance Associate Secretary Dakila E. Napao and Bureau of Internal Revenue (BIR) Deputy Commissioner Marissa O. Cabreros expressed support for the bill, but requested the addition of a clause denying schools the right to a refund, which the committee approved.

Mr. Salceda said forcing private schools to pay the regular corporate tax rate of 25%, as the BIR contends, will “force… private education to shed another 21,661 jobs due to the tax rate adjustment alone.”

The BIR interprets the CREATE tax relief to apply only to non-profits, rendering many private schools ineligible.

Tax relief until 2023 “would allow these schools to save an equivalent of 3.43% of compensation expenses, which could help them rehire at least 12,996 teachers at the start of the next school year,” he added. 

Speaker Lord Allan Jay Q. Velasco supports the bill, it emerged during the proceedings.

Senate Bill 2272, that chamber’s counterpart bill, was filed by Senator Juan Edgardo M. Angara on June 3.

On April 9, the BIR issued Revenue Regulation 5-2021 outlining its interpretation of the CREATE law, which would leave most private schools to pay 25%. — Bianca Angelica D. Añago

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