The House of Representatives on Monday approved on third reading 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 as well as the one percent special tax rate until 2023.
The chamber passed House Bill 9913, which seeks to clarify 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).
Albay Rep. Joey Salceda, chairperson of the House Ways and Means Committee and principal author and sponsor of the bill, said this will constitute a 96 percent tax discount to private schools from 2020 to 2023, and a 60 percent tax discount thereafter.
“That is the largest ever 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,” Salceda said.
The bill 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. The BIR has already suspended the rule.
Revenue Regulation 5-2021 would have increased the income tax of private schools from 10 percent to 25 percent by defining proprietary educational institutions as private and non-profit entities.
“Although the rule was suspended, their responsibility under the law has not yet been expunged. So, we still have to address that complication. Besides, they are unable to avail of the 1% rate,” Salceda added.