Press Release
July 30, 2021

Drilon urges Duterte to certify bill correcting BIR definition of private educ institutions The senator thanks BIR for heeding calls to suspend tax hike on private schools

Senate Minority Leader Franklin M. Drilon urged the President to certify as urgent a pending bill in Congress that will clarify the taxability of proprietary educational institutions even as he lauds the Bureau of Internal Revenue (BIR) for heeding his call to immediately repeal or suspend the implementation of the erroneous Bureau of Internal Revenue Regulation 5-2021 raising to 25-percent the income tax of private education institutions.

"I call on the President to certify as urgent Senate Bill 2272 and its counterpart measure in the House of Representatives which seeks to clarify that the qualifier non-profit under Section 27(B) of the National Revenue Code only applies to hospitals and not to proprietary educational institutions," Drilon said. The BIR issued Revenue Regulations (RR) 14-2021 suspending certain provisions of RR 5-2021 that effectively increased the corporate income tax of private schools to 25%. "I am elated that the BIR heeded our call. This affirms our position that the withdrawn BIR regulation erred in redefining an educational institution for taxation purposes. The CREATE law wanted to relieve educational institutions from the burden of paying taxes during the pandemic. It never intended to change the tax regime applicable to them and the law that we passed did not amend the definition of educational institutions," Drilon explained.

Likewise, Drilon called on the Senate to immediately pass SB 2272. "The Senate must prioritize this measure before we tackle the 2022 national budget. I urge that it be referred to the floor for deliberation immediately," Drilon said. Earlier, Drilon voiced his opposition to the BIR Regulation 5-2021, calling it "ill-conceived and ill-timed" as he feared for the future of thousands of private schools which might permanently close down operations, leaving thousands of teachers and non-teaching staff unemployed.

"It was reasonable to have asked for suspension of BIR Revenue Regulation 5-2021 until we can correct this erroneous interpretation through a law. The schools are already suffering from the pandemic," Drilon had earlier appealed to BIR.

Drilon said that SB 2272, filed by Sen. Sonny Angara, is not an amendatory law as it will only clarify the erroneous BIR interpretation. Citing reports by the Department of Education, Drilon said there are around 750 private schools that closed down in 2020 due to the pandemic, affecting around 3,200 teachers.

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