THE BUREAU of Internal Revenue suspended the implementation of its new regulation that imposes a 15 percent tax increase on private schools.

Finance Secretary Carlos Dominguez III on July 27, 2021 signed Revenue Regulations 14-2021, which put into hold the 25 percent corporate income tax imposed on private schools, cancelling the 1 percent pandemic rate offered by the CREATE Act.

Dominguez said the agency made the decision “to ease the burden of taxation among proprietary educational institutions, and taking into account two pending bills in Congress that would clarify income taxation on schools.”

With the suspension of RR No. 5-2021, non-profit private schools can continue to avail of the 1% preferential tax rate.

Anthony Jose Tamayo, chairman of the Coordinating Council for Private Educational Associations, commended DOF and BIR for heeding their appeals.

“On behalf of the COCOPEA, we thank the Department of Finance and the BIR for heeding the call of the Senate and the pleas of the private education sector to suspend the enforcement of BIR RR 5-2021 pending the passage of appropriate legislation clarifying the taxability of proprietary educational institutions,” Tamayo said.

“This will certainly help many of our struggling schools continue in their delivery of education amidst the Covid19 pandemic,” he added.

Senator Joel Villanueva,  chairman of the Senate Committee on Higher, Technical and Vocational Education, also welcomed the suspension of the new tax rule.

“Ito po ang kailangan natin na ‘academic revenue freeze.’ Dagdag na tulong, hindi dagdag na tax ang kailangan ng mga pribadong paaralan sa panahon ng pandemya. Wala pong revenue loss dito,” Villanueva said in a statement.

“Nagpapasalamat po tayo sa Department of Finance sa pagtutuwid ng interpretasyon ng batas na maglalagay sa kapahamakan ng mga paaralan na tulad ng isang na-Covid ay naghihingalo,” he added.

The senator also asked his colleagues in the legislature to support Senate Bill 2272, which seeks to help correct irregularities in RR No. 5-2021.

“Hindi po nakaukit sa bato ang isang batas. The challenge now is on the House and the Senate to pass the amendatory bill. The revenue regulation is a conditional freeze. It is up to the legislature to make it permanent,” Villanueva said.