SENATE Minority Leader Franklin Drilon on Thursday suggested that the Senate pass a resolution rejecting the erroneous interpretation of the tax regime governing educational institutions.

He called on the Department of Finance to immediately repeal or suspend the implementation of Bureau of Internal Revenue Regulation 5-2021 raising to 25 percent the income tax of private schools.

Drilon said that the resolution should accompany Senate Bill 2272, filed by Senator Juan Edgardo ‘Sonny’ Angara, which seeks to clarify that the qualifier non-profit under Section 27B of the National Revenue Code only applies to hospitals and not to educational institutions.

“We did not amend the coverage of educational institutions. The BIR regulation ruled and interpreted it otherwise and redefined what is an educational institution for purposes of tax regime. That is totally an uncalled-for interpretation,” he said.

“The way the BIR interprets what we passed is entirely wrong. We support this amendment and we are confident that SB 2272 which clarifies the tax on educational institutions will be passed,” he added.

He described the BIR’s order as the “sword of Damocles” hanging over private schools reeling from the pandemic.

“It is reasonable to ask for suspension of BIR Revenue Regulation 5-2021 until we can correct this erroneous interpretation through a law. The Senate is not in session and we can only discuss this on the floor next month. The schools are already suffering from the pandemic. They have to decide by the opening of the school year how to handle this. There is urgency in this,” Drilon added.