A bill that would define the tax rates for proprietary schools to allow them to avail of the 10-percent preferential rate on taxable income hurdled committee level at the House of Representatives.
In a virtual hearing on Monday, the Ways and Means committee approved an unnumbered substitute bill that clarified that the preferential tax rate of 10 percent imposed on proprietary educational institutions will be reduced to 1 percent from July 1, 2020 to June 30, 2023, after which the tax rate shall be set to 10 percent under the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE).
The bill, crafted by Albay Rep. Joey Salceda, is meant to intervene in the implementation of the recent regulation of the Bureau of Internal Revenue (BIR), increasing the tax rate of private educational institutions to 25 percent from 10 percent.
“During the briefing, we reached a consensus and came up with a draft which also adopted some recommendations of the Coordinating Council of Private Educational Associations. The draft clarified that the preferential tax rate, now 1 percent of their taxable income under CREATE, applies to all proprietary schools. We sent this draft Committee Report along with the notices and invitations,” Salceda said.
Salceda stressed the need to immediately pass the bill to help private schools hire more teachers and keep existing staff.
“It will help private schools keep their teachers. They already had to fire teachers due to the pandemic. I think the whole committee agrees we should provide them relief,” Salceda said.
Salceda further noted that applying the reduced 1 percent preferential rate under CREATE until 2023 would allow schools to save an equivalent of 3.43 percent of compensation expenses, which could help them rehire at least 12,996 teachers at the start of the next school year.
Salceda said that the bill will also absolve the private schools of the legal liability to pay back taxes during the period when the law was unclear as to their treatment.
“But the aim is also to ensure that the BIR is also absolved from any refund liabilities. It’s a good compromise and was the premise of the agreement between me and the BIR,” Salceda added in response to a request from private school associations that the clause in the bill preventing refunds due to the rate reduction be removed.
He expressed hope that the bill can be transmitted to Malacañang for President Rodrigo Duterte’s signature before the year ends.
Source: Philippines News Agency
