The imposition of a 25% corporate income tax on private schools could be the “final nail in the coffin” for the country’s educational system that is grappling with the coronavirus pandemic. 

Senator Sonny Angara called the Bureau of Internal Revenue’s (BIR) new tax regulation on private schools as a “bad policy” during the Senate committee on ways and means hearing on Wednesday, June 30.

“Any higher tax imposition is not only unwarranted in law, it’s also bad policy, Madam Chair, given the history of educational reforms,” Angara said.

“To jump from 10% to 25%, wow, that could be the final nail in the coffin for many of the smaller private schools, Madam Chair,” he added. 

Angara is the primary author of Senate Bill (SB) No. 2272, which seeks to correct the BIR’s new but “erroneous” tax on private schools. 

BIR’s Revenue Regulation No. 5-2021 imposed a 25% corporate income tax on private schools, which negated the 1% rate offered by the Corporate Recovery and Tax Incentives for Enterprises Act, a pandemic-driven act.

Angara said the implementation of the K to 12 law in 2012 hit the private education sector hard, but it still supported the measure to create globally competitive senior high school graduates. 

He also said implementation of Republic Act No. 10931 or the Universal Access to Quality Tertiary Education Act in 2018 was the “second big blow” for private educational institutions due to its poor implementation. 

The COVID-19 pandemic was also a major factor to why private schools were going through a difficult period today, said Angara.

“So, ‘pag pinagsama-sama po lahat yan (So, if combined all together), it is a very difficult period for our private education institutions, so I think this is a very urgent measure,” Angara said.

Other senators were also not in favor of BIR’s new regulation on private schools, with Senate Minority Leader Franklin Drilon calling the additional tax as a “sword of Damocles” hanging over the education sector.

Private schools’ pleas

During the same hearing, Philippine Association of Colleges and Universities (PACU) president Anthony Tamayo  said BIR’s new tax rule was an added burden during the COVID-19 crisis.

“The preferential tax treatment of proprietary educational institutions is indeed necessary to spur further investments and enhance the complementary role of [the] private education sector under the Philippine education system,” said Tamayo. 

“On the other hand, the erroneous provision of RR No. 5-2021 will add an additional heavy burden to many of our stakeholders in the private education sector at a time when we are already fighting for our survival amidst the pandemic,” he added.

Coordinating Council of Private Educational Associations (Cocopea) managing director Joseph Estrada also said Angara’s bill was important in helping bring back confidence in the private school sector.

“It [is] really very encouraging for us to continue. And of course, we appeal for recognition of the private education sector in our contribution to our rehabilitation and recovery measures post pandemic and certainly our contribution in the human capital development,” said Estrada.

PACU and Cocopea already filed a petition before the Court of Appeals to stop the BIR’s new tax regulation. – Rappler.com

Jamilah Angco is a 3rd year journalism student from the University of Santo Tomas. She is a Rappler intern.