The imposition of a "devastating" 25% corporate income tax on private schools would lead to a tuition hike, an organization of private schools said on Friday, June 11.
The Coordinating Council of Private Educational Associations (Cocopea) said the new tax policy will hit parents the hardest.
"Ang sigurado is na tayo, mga magulang, the cost of education of course will go up," Cocopea Managing Director Joseph Noel Estrada said in an interview with DZMM's TeleRadyo. (We parents are certain that the cost of education of course will go up.)
"Kung hindi man magsara ay (If not closure) it will drive the cost of the education higher," he added.
Data from the Department of Education (DepEd) showed that at least 865 private schools have suspended their operations for this school year due to low enrollment and inability to meet the requirements of learning management systems for distance learning.
Revenue Regulation 5-2021 will impose a 25% corporate income tax on private schools, cancelling the 1% rate offered by the pandemic rescue package Corporate Recovery and Tax Incentives for Enterprises Act (CREATE Act).
Cocopea said the new revenue regulation deprives private schools the preferential tax treatment of 1% from 10% during the pandemic under the CREATE Act.
Cocopea is the country's biggest organization of private schools composed of about 2,500 schools and education stakeholders.
Several lawmakers expressed opposition on the new BIR tax rule. Senator Sonny Angara filed a bill that aimed to correct the "erroneous" tax regulation.
Meanwhile, Senator Sherwin Gatchalian, chairman of the basic education committee, urged the BIR to suspend the tax rule, noting that the added burden on "struggling" institutions could lead to "more school closures, job losses, and a more restricted access to education."
On Monday, June 7, Cocopea and the Philippine Association of Colleges and Universities filed a petition before the Court of Appeals (CTA) to stop the BIR's new tax regulation.
The 81-page petition said the BIR and the Department of Finance committed a "grave abuse of discretion" for altering the Tax Code and raising the tax on private schools from 10% to 25%. The petitioners asked the CTA to issue a temporary restraining order to stop the BIR in implementing the new regulation.