By Jacqueline P. Miranda

Bill filed to exempt goods sold in schools from VAT

Posted on May 24, 2014

TWO lawmakers are seeking to exempt educational institutions from Value-Added Tax (VAT) for the goods sold in schools.

House Bill (HB) 4165, filed in March by Cagayan De Oro Rep. Rufus B. Rodriguez and Abante Mindanao Party-list Rep. Maximo B. Rodriguez, Jr., seeks to amend the Tax Reform Act of 1997 (Republic Act 8424) to include this exemption.

"One of the factors which place a big burden [on] the populace is the high tuition fees of schools, which is even aggravated by the value-added tax that is being passed on to the schools by its suppliers of goods and services. Unfortunately, the VAT is then passed on by the schools to the students, which make[s] it more difficult for them to afford the already high tuition fees," Messrs. Rodriguez said in the bill's explanatory note.

"As such, and in order to help ease this burden, an amendment must be made to Section 109 of the Tax Reform Act of 1997 by exempting from VAT goods purchased by the school and services rendered to it by the suppliers and service providers," the lawmakers added.

The bill would amend Section 109 of the Act by adding the phrase "including all goods purchased and services rendered to said educational institutions by suppliers and service providers".

In the Tax Reform Act, only educational services of private educational institutions accredited by the Department of Education, Culture and Sports and the Commission on Higher Education and by government institutions are VAT-exempt. -- Jacqueline P. Miranda