SENATOR Sherwin Gatchalian on Wednesday urged the Bureau of Internal Revenue to suspend the imposition of a 25 percent corporate income tax on private schools, warning that pushing through with it could lead to school closures and job losses.

He maintained that BIR’s Revenue Regulation 5-2021 runs counter to the intention of the Corporate Recovery and Tax Incentives for Enterprises Act or CREATE law which seeks to impose a one percent tax rate on proprietary educational institutions for a three-year period.

“Sa panahong karamihan sa ating mga private schools ay nahihirapang magpatuloy ng operasyon sa gitna ng pandemya, hindi napapanahon at hindi tamang patawan natin sila ng karagdagang buwis bilang dagdag-pasanin,” the chairman of the Senate Committee on Basic Education, Arts and Culture said.

Under the CREATE Law, “proprietary” means a private hospital or private school maintained and administered by private individuals or groups.

The BIR however maintained that proprietary educational institutions have to be non-profit to avail of the reduced tax rate.

Gatchalian said the tax rule was ill-timed because private schools are struggling to stay afloat. Last February, the Department of Education reported that 929 private schools did not operate in School Year 2020-2021.

The Coordinating Council of Private Educational Associations said that enrollment in private K-12 schools dropped by over 900,000.