Dominguez supports tax amendments

by Czeriza Valencia (The Philippine Star), 7 Jun 2021

MANILA, Philippines — Finance Secretary Carlos Dominguez supports the amendment of a section of the Tax Code pertaining to tax treatment of proprietary educational institutions.

This after an association of private schools asked President Duterte to reverse a regulation issued by the Bureau of Internal Revenue (BIR) that will raise the tax imposed on private schools to 25 percent from the current 10 percent.

Senator Sonny Angara then filed Senate Bill 2272 to clarify the language of Section 27 (B) of the Tax Code to address the confusion caused by the BIR’s Revenue Regulation (RR) 5-2021.

“The RR is based on Supreme Court decisions and the Tax Code. We will, however, respect and implement any future decision of the Supreme Court or enacted legislation concerning this matter,” said Dominguez, adding that “it would be better if the law is amended so the issue is resolved once and for all. Any future secretary of Finance or BIR commissioner can bring up the issue again.”

The Coordinating Council for Private Educational Associations (COCOPEA) is protesting the specification in the regulation that educational institutions must be “non-profit” to be eligible for the temporary reduction of the concessionary income tax rate of proprietary educational institutions from 10 percent to one percent for the next three years under the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE).

Otherwise, private educational institutions should pay the regular corporate tax rate of 25 percent, significantly up from the current 10 percent rate.

COCOPEA, however, argued the imposition of higher taxes on private schools during this time would force financially distressed schools to close down.

BIR rejected its appeal asserting that the regulation is consistent with the Tax Code.

Angara’s bill seeks to amend Sec. 27(B) to clearly indicate that the preferential tax rate shall apply to all proprietary educational institutions, including those that are stock and for profit and non-profit hospitals.

Dominguez, meanwhile, said there is no immediate need to revise the revenue regulation.

“There’s no urgency to change the RR at the moment. The quarterly income tax returns that the schools have to file are provisional. Final returns for 2021 are due next year,” he said.