Ways and means panel OKs bill defining tax rates for proprietary schools

The House committee on ways and means approved Monday the still unnumbered substitute bill which aims to define the tax rates for proprietary schools to allow them to avail of the 10% preferential rate on taxable income.

In the bill, principally authored by panel chairperson and Albay Representative Joey Salceda, the preferential tax rate of 10% imposed on proprietary educational institutions will be reduced to 1% from July 1, 2020 to June 30, 2023, after which the tax rate shall be set to 10%.

“During the briefing, we reached a consensus and came up with a draft which also adopted some recommendations of the Coordinating Council of Private Educational Associations. The draft clarified that the preferential tax rate, now 1% of their taxable income under CREATE, applies to all proprietary schools," Salceda explained.

The said bill is meant to intervene in the implementation of the recent regulation of the Bureau of Internal Revenue (BIR) increasing the tax rate of private educational institutions from 10% to 25% so as to help private schools hire more teachers and keep existing staff.

“It will help private schools keep their teachers. They already had to fire teachers due to the pandemic. I think the whole committee agrees we should provide them relief,” Salceda said.

He added that this would allow schools to save an equivalent of 3.43% of compensation expenses, which could help them rehire at least 12,996 teachers during the start of the next school year.

Salceda further said the bill would also “absolve the private schools of the legal liability to pay back taxes during the period when the law was unclear as to their treatment.”

"The aim is also to ensure that the BIR is also absolved from any refund liabilities. It’s a good compromise and was the premise of the agreement between me and the BIR," he said.—AOL, GMA News