Cocopea: BIR offices levy 30% income tax despite DOF freezing order

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The country’s largest private school associations revealed on Wednesday that some offices of the Bureau of Internal Revenue (BIR) in the regions still apply a 30% income tax rate despite the ministry’s suspension of the order. finances.

With this, the Coordinating Council of Private Educational Associations (Cocopea) called for the rapid adoption of a bill clarifying the taxation of income of private educational institutions.

“We have received reports from our members that despite the ongoing legislative process and the DOF’s suspension of BIR revenue regulation [RR] 5-2021, some BIR regions continue to impose an income tax rate of 30 percent citing the BIR Revenue Memorandum Circular [RMC]-67, 2012 series, ”said Dr Anthony Jose M. Tamayo, President of Cocopea, which represents more than 2,500 private educational institutions with more than 300,000 school staff.

These BIR regions, Tamayo pointed out, continue to argue that RR 14-2021, which “suspended RR 5-2021, applies prospectively and does not apply to evaluations involving prior years”.

Tamayo, who is also president of the Philippine Association of Colleges and Universities, added that these “unfortunate developments” only reinforce the urgency and importance of the enactment of the clarifying bill expressed by its authors, which would serve lifeline to these educational institutions from the poor application of Article 27B of the General Tax Code, which puts them on the verge of closure.

He said that was why they were calling for the swift passage of the bill which aims to permanently guarantee the granting of a preferential tax rate of 10% for private schools, including the rate temporarily lowered by 1% during the pandemic, as part of the business takeover. and the Law on Tax Incentives for Businesses (CREATE Law).

Once enacted, the bill would make qualifying private schools for a 1 percent preferential tax rate under the CREATE Act, instead of the 150 percent increase imposed by recent Bureau of Internal regulation. Returned.

“As the Philippine economy is gradually and safely reopening, which includes the safe reopening of our schools to face-to-face learning from November 15, 2021, the enactment of this bill would allow schools education to focus on their efforts to ensure the safety of students, teachers and school staff on campus, ”Tamayo said.

He said the bill would give private schools the financial assurance and security to allow them to maintain operations for the remainder of the school year despite having suffered another substantial drop in enrollment since pandemic started in March 2020, with enrollment dropping to 1.9 million students. about 4.3 million before the pandemic.

“The millions of stakeholders in the private education sector and related ecosystem who depend on the continuity of our schools are eagerly awaiting the enactment of this landmark legislation,” Tamayo said.

More importantly, he pointed out that the clarification bill will finally end all ambiguities in granting a 10 percent preferential tax rate to private educational institutions since the enactment of the National Internal Revenue. Code in 1997, and even before.

Other groups pushing for the immediate passage of the bill are the Davao Colleges and Universities Network Association of Private, Public and University Colleges in Region 11, the Bicol Association of Private Colleges and Universities and the ‘CESAFI Association of Private Schools in Cebu.


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