House defines tax rates to allow entitlement to reduction

 

Private educational institutions have turned to court after the Bureau of Internal Revenue slapped them with a 25 percent tax hike via the implementation of its RR 5-2021.

Contested is a clause that schools have to be non-profit to avail the temporary tax cut under the CREATE (Corporate Recovery and Tax Incentives for Enterprises) law.


MANILA — Representative Jose Maria Clemente Salceda (Albay), principal author of the CREATE law, has proposed an amendment to the National Internal Revenue Code that would put an end to private schools’ anguish. The tax collection agency just hiked their taxes to 25 percent.

Since the tax collector would not budge as it sticks to the aforementioned contested clause, the “most obvious recourse” now, says CREATE’s principal author, is to define tax rates for the said schools that would allow it to be entitled to the reduction.

Congressman Salceda’s proposed House Bill 9596 would include proprietary schools—or those owned and managed by private individuals or groups—to avail of the said easing of income tax.

“This relief is urgent as private schools continue to reel from the effects of COVID-19,” says the congressman, “and as Government was unable to extend significant support to this sector given its own fiscal constraints.”

The Coordinating Council of Private Educational Associations has feared that, should the hike push through, it could result in more school closures and job loss for employees amid a pandemic.

Intended by its authors “to lower taxes on corporations, not to increase them,” as the title of the law suggests—CREATE: Corporate Recovery and Tax Incentives for Enterprises—the BIR had an altogether different interpretation.

A number of lawmakers from both chambers of the House have urged the BIR to abandon its policy as it goes against the 1987 Constitution, and therefore, illegal, says Deputy Speaker Rufus Rodriguez recently.

A Senate version of the measure has been filed by Senator Juan Edgardo Angara, who also chairs the Senate’s finance committee. (BG/Headline PH)

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