HOUSE LEGISLATORS approved a measure on third and final reading Monday to explicitly make private schools eligible for preferential tax rates which will allow them to recover from the crisis, after their eligibility for such relief had been questioned by the Bureau of Internal Revenue (BIR).
House Bill 9913 amends Section 27 (B) of the National Internal Revenue Code of 1997 to apply the 10% preferential tax rate to all proprietary educational institutions and nonprofit hospitals from Jan. 1, 2012 to June 30, 2020.
In effect, private schools will pay a tax rate of 1% between July 1, 2020 and June 30, 2023, as authorized by Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law. Once the provision expires, the tax rate will revert to 10%.
The measure was passed by the House Ways and Means committee on Aug. 2 and was passed on second reading the next day.
The BIR had suspended provisions of Revenue Regulations No. 5-2021, which granted tax relief only to private educational institutions that are “nonprofit” ineligible schools had to pay the 25% regular corporate income tax rate.
Albay Rep. Jose Ma. Clemente S. Salceda, chairman of the House Ways and Means committee, said Monday that the measure will help private schools hire at least 12,996 teachers at the start of the next school year.
“That is the largest 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,” he added.
He also hopes that the Senate adopts the House-approved version to ensure that the bill is transmitted to Malacañang before the year ends.
Private school groups, led by the Coordinating Council of Private Educational Associations welcomed the bill’s passage in the House, calling on the Senate to take prompt action on the measure.
“This legislative policy intervention, once enacted, will provide the needed stability to education not only in this time of pandemic but also for generations to come, as it aligns with all existing and future initiatives to revive our battered economy,” they said in a joint statement. — Russell Louis C. Ku
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