A BILL that would explicitly qualify private schools for tax relief would skip the bicameral conference committee after the House adopted the Senate version of the measure on Wednesday evening.
The House adopted Senate Bill No. 2407 as amendments to House Bill 9913, allowing for the measure to be transmitted to Malacañang for the President’s signature.
The measure would amend Section 27(B) of the National Internal Revenue Code that would grant a reduced tax rate of 1% from July 1, 2020 to June 30, 2023 to all proprietary educational institutions and nonprofit hospitals, as provided for under Republic Act 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law.
The reduced tax rate would help private schools recover from the economic crisis due to the COVID-19 (coronavirus disease 2019) pandemic which has affected enrollment numbers.
Once the provision expires, the tax rate will revert to 10%.
However, the Senate version removes a provision where no tax credit or refund can be granted due to the reduced tax rate.
The measure comes after the Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) No. 5-2021 requiring private educational institutions to be “nonprofit,” effectively increasing the tax rate for private schools to the 25% regular corporate income tax.
The provision has since been withdrawn by the BIR on July 27.
Albay Rep. Jose Ma. Clemente S. Salceda, chairman of the House Ways and Means committee, said in a statement on Wednesday that he recommended for the adoption of the Senate version through a letter to House Majority Leader Ferdinand Martin G. Romualdez.
“With that letter, I think we will be able to send the bill to the President this week,” he said.
Mr. Salceda earlier said that the bill, if signed, would allow schools to “save an equivalent of 3.43% of compensation expenses, which could help them rehire at least 12,996 teachers at the start of the (current) school year.”
Coordinating Council of Private Educational Associations (COCOPEA) Managing Director Joseph Noel M. Estrada welcomed the development, adding that he hoped the bill would be passed into law as soon as possible.
“The millions of stakeholders of the private education sector and the linked ecosystem that depend on the continuity of our schools, would be deeply grateful to our Senators and Congressmen who tirelessly worked in passing this landmark legislation,” he said in a Viber message.
A total of 1.443 million private school students have enrolled for school year 2021-2022 as of Sept. 13, lower by 57% compared with 3.376 million in the past school year, according to data from the Department of Education.
To cope with the decline, 71% of private schools are considering the implementation of a “no work, no pay” scheme, 64% are considering retrenchment of employees, and 55% are considering closure of their schools, according to a survey conducted by COCOPEA among over 250 member schools. — Russell Louis C. Ku