A GROUP of private schools asked the Bureau of Internal Revenue (BIR) to officially revoke its issuance that increased the income tax of non-profit educational institutions to 25%, the Coordinating Council for Private Educational Associations (COCOPEA) said in a press release on Tuesday.
COCOPEA, composed of the five biggest education associations representing around 2,500 private schools, said the 25% tax rate is still being implemented since BIR’s Revenue Memorandum Circular (RMC) 76-2021 on June 11 only clarified computation errors under Revenue Regulations (RR) No. 5-2021, but does not rectify the “onerous 150% tax hike” on private schools.
The BIR issued RR 5-2021 to implement the lowered one-percent corporate income tax under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law for non-profit educational institutions.
The tax agency stood firm in its interpretation that only private schools that are “non-profit” will enjoy the lowered tax rate, while the rest will have to pay the regular 25% rate — a decision that COCOPEA is questioning.
The group petitioned Malacañang for an intervention from President R. Duterte to reverse the issuance while a separate bill was filed in Congress to clarify the tax treatment of private educational institutions under the National Internal Revenue Code.
“Unless there is an official clarification from the BIR that removes the “non-profit” qualification in RR 5-2021 for proprietary educational institutions to enjoy the preferential tax rate of 10% under the Tax Code which is further lowered to 1% under the CREATE Act, we do not see any change at all in the existing tax policy that we are appealing to be corrected,” COCOPEA Managing Director Joseph Noel M. Estrada said in the statement. — Beatrice M. Laforga