Press Release
June 8, 2021

Drilon urges Duterte: Direct BIR to correct erroneous order
Drilon fears the BIR order can force private schools to permanently shut down, leaving thousands jobless as PHL's unemployment rate rises to 8.7% in April

Senate Minority Leader Franklin M. Drilon urged the President to direct the Bureau of Internal Revenue to correct its erroneous BIR Revenue Regulation 5-2021 imposing a 25-percent corporate income tax on private schools, saying it is "ill-conceived and ill-timed" and is "a classic case of legislation by IRR."

"I urge the President and the BIR to heed the call of private schools and senators to recall RR 5-2021. It has no basis in CREATE and it defeats the very purpose of CREATE law," Drilon said.

"It is a classic case of legislation by IRR," he added.

CREATE or the Corporate Recovery and Tax Incentives for Enterprises, signed into law in March, introduces reforms to the corporate income tax and incentive systems and was meant primarily to ease the burden on corporations who have been suffering because of the pandemic, he noted.

This is the reason why, for two years, the law lowers the income tax of proprietary educational institutions to only 1%. This is in recognition of the hardship that these institutions had to suffer through, many of which have been forced to close down or whose enrollment has substantially declined, he added.

Drilon said such an erroneous and onerous interpretation of the law can jeopardize thousands of private schools in the country.

"RR 5-2021 could potentially be the 'last nail in the coffin' for some of these private schools which barely survived the effects of the pandemic," Drilon said.

The BIR's order could force private educational institutions to permanently close down, leaving thousands of teachers and non-teaching staff unemployed, he added.

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.

"Maawa naman po tayo sa naghihikahos na private schools sa bansa. Huwag na po nating pahirapan pa. Instead, let's help them get back on track," Drilon appealed.

The Philippine unemployment rate rose to 8.7 percent in April 2021, equivalent to 4.14 million jobless Filipinos, an increase of over 700 thousand from the 3.4 million recorded last March 2021, Drilon noted.

"Baka madagdagan ang unemployed kapag nagsara ang private schools dahil sa order na ito ng BIR," he said.

Drilon said that BIR should not legislate through IRR. He added that the BIR needs to only read the legislative records and transcripts to confirm that it has gravely erred in issuing RR 5-2021.

"The prevalence of this practice is lamentable for it defeats the purpose of the law crafted by the legislature and it alters the true intent of Congress. We should put a stop to this kind of erroneous and misplaced interpretation of the law by executive agencies," Drilon said.

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