DoF sides with BIR on private school tax hike

The Department of Finance is not changing its decision allowing the Bureau of Internal Revenue (BIR) to impose higher income tax on private schools, adding that the BIR regulation can only be changed by the Supreme Court or by amending the Tax Code.

Finance Secretary Carlos Dominguez said, “The (Revenue Regulation) is based on Supreme Court decisions and the Tax Code. We will respect and implement any future decision of the Supreme Court or enacted legislation concerning this matter.”

He was referring to BIR Revenue Regulation 5-2021 that increased income tax on so-called proprietary educational institutions that are administered by stock corporations from 10% to 25%.

“It would be better if the law is amended so the issue is resolved once and for all. Any future Secretary of Finance or BIR Commissioner can bring up the issue again,” he added.

“Also, there’s no urgency to change the RR at the moment. The quarterly income tax returns that the schools have to file are provisional. Final returns for 2021 are due next year,” Dominguez said.

Earlier, the Coordinating Council of Private Educational Institutions (Cocopea) urged President Duterte to modify the said BIR regulation that the industry organization argued was incorrect.

Cocopea wrote to Duterte saying the tax rule will inflict “irreparable damage” to private schools by more than doubling their income tax of 10% which had been the prevailing rate since 1968. “Simply put, RR 5-2021 will severely harm the schools, parents, students, teachers, employees, and other stakeholders in the private education sector, which is a partner of government in providing quality education nationwide.”