COCOPEA asks Duterte to 'correct' tax rule on private schools

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Metro Manila (CNN Philipines, June 10) — The Coordinating Council for Private Educational Associations is asking President Rodrigo Duterte to intervene in the implementation of the new policy of the Bureau of Internal Revenue that will impose higher taxes on private schools.

Speaking to CNN Philippines' The Source on Thursday, COCOPEA spokesperson and managing director Joseph Noel Estrada expressed hope that Duterte can correct what was written in the BIR Revenue Regulation No. 5-2021, which could potentially bankrupt private schools amid the pandemic.

"We are confident that being the chief executive, being the head of all government agencies and offices, he will intervene and hopefully correct that issuance of BIR," Estrada said.

Under the new rule, the income tax rate of private schools will increase by 150%, a move which COCOPEA and private schools claim to be a violation of the Tax Code and the Constitution.

"Barely two weeks after the CREATE law was signed into law, the BIR issued Revenue Regulation No. 5-2021 removing that preferential tax rate, telling us not 1%, not 10%, but you should be taxed just like any other corporation and enterprise which should be at 25%. In effect, providing an increase of 150% in our taxes," Estrada said.

Estrada stressed that proprietary schools have only been paying a 10% preferential tax rate since 1968 since they help the government in providing educational services to the people.

The BIR, on the other hand, noted that they will cooperate and comply with any law that may be passed by Congress, which has already stepped in to resolve legal issues.

"As far as BIR is concerned, it is just implementing the law and Supreme Court decision defining 'proprietary educational institutions.' The schools can of course question our position in the courts," BIR Commissioner Caesar Dulay told CNN Philippines in a text message.

Senators previously stressed that the new tax rule was contrary to the aim of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, which seeks to cushion the impact of the coronavirus, and even "bail out distressed private schools."

Senate Bill No. 2272 has recently been filed to amend a section in the National Internal Revenue Code to clarify the BIR regulation for private educational institutions.

READ: Senators to BIR: Withdraw income tax hike on 'distressed' private schools