January 29, 2023

An appeal to revoke the tax hike for private schools and universities

As chair of the House Committee on Higher and Technical Education, and as a member of the Committee on Ways and Means, I appeal to the Bureau of Internal Revenue to correct the provisions under BIR Revenue Regulation 5-2021, which raise the income tax on proprietary educational institutions from 10 percent to 25 percent.
The erroneous interpretation of the Corporate Recovery and Tax Incentives for Enterprises (Create) Act runs afoul with the intent of the legislators who enacted the said law to reduce the financial burden on corporations in general.
The determination of the subject, object, and rate of taxation is ultimately within the province of the legislative branch, and an implementing agency cannot deviate from the intent of a statute.
It is also elementary that tax laws may only be applied retroactively when expressly declared or is clearly the legislative intent and that such retroactive application would not be so harsh and oppressive against a taxpayer.
A complete reading of the entire Create Act, as well as the records of deliberations would clearly show that the legislators never intended to impose such an oppressive interpretation, particularly since the provision is intended to have retroactive effect.
Private educational institutions are among those which were severely hit by the pandemic. According to recent reports, private school enrolment for academic year 2020-2021 dropped by as much as two million students.
Congress is well aware of the plight of private education institutions, and we find it unconscionable to impose heavier obligations during these tough times which may lead to cessation of operation of schools, and termination of employment of faculty and non-teaching personnel.
I acknowledge the zealous efforts of the BIR to raise revenues in support of our response to the pandemic and to help in financing activities that would reenergize the economy. That being said, there is a clear misinterpretation of the law in this case.
I appeal to BIR to immediately revoke RR 5-2021 and make the necessary corrections to reflect the true intent of the legislators, and to allay the fears of the stakeholders. — REP. MARK GO, Baguio City

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