Press Release
July 29, 2021

Villanueva rallies support to make temporary tax freeze on private schools permanent

Now that a temporary freeze has been imposed on the implementation of a BIR regulation erroneously increasing taxes on private schools instead of reducing them, Senator Joel Villanueva reiterated the importance of making the provisional stay permanent by amending the law.

At the same time, Villanueva lauded the Department of Finance for putting a stop, albeit temporary, to a misreading of the intent of the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE Act) when the BIR increased taxes for academic institutions a revenue regulation issuance.

"Ito po ang kailangan natin na 'academic revenue freeze.' Dagdag na tulong, hindi dagdag na tax ang kailangan ng mga pribadong paaralan sa panahon ng pandemya. Wala pong revenue loss dito," said Villanueva, chair of the Senate higher and technical and vocational education.

"Nagpapasalamat po tayo sa Department of Finance sa pagtutuwid ng interpretasyon ng batas na maglalagay sa kapahamakan ng mga paaralan na tulad ng isang na-COVID ay naghihingalo," he added.

The DOF, through the BIR Revenue Regulation No. 14-2021 issued on July 26, suspended the implementation of RR 5-2021 that imposes a tax rate of 25% on private schools, which is more than the previous 10% it enjoyed pre-pandemic, due to an erroneous interpretation of CREATE.

Villanueva welcomed the suspension and asked his colleagues in the legislature to support Senate Bill No. 2272, the bill that would clarify the language in the supposed tax relief law. Villanueva co-authored and co-sponsored the measure filed by Senator Sonny Angara in May.

"Hindi po nakaukit sa bato ang isang batas. The challenge now is on the House and the Senate to pass the amendatory bill. The revenue regulation is a conditional freeze. It is up to the legislature to make it permanent," he said.

Villanueva pointed out that the freeze in implementation of the said revenue regulation may actually result in government saving funds and avert the exodus of students from private schools to public education institutions.

"When private schools are forced to close shop or cut classes, their students would transfer to public schools, a mass migration that will have budgetary implications at a time when public finances are tight."

Earlier, Villanueva called out the BIR for issuing RR 5-2021 earlier this year for its mistaken reading of the CREATE law passed in March.

He said the intent of the law is to aid private enterprises such as schools and not further burden them with more taxes in a revenue regulation issuance.

"Always, the spring cannot rise above the source. In the case of the tax break for schools, the unanimous intent of senators is that the tax of private educational institutions be reduced from the current 10% to 1%," Villanueva earlier said.

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Villanueva: Tax freeze sa mga pribadong paaralan, gawing permanente

Ngayong pansamantalang itinigil ang pagpapatupad ng isang regulasyon ng BIR na nagtataas ng buwis sa mga pribadong paaralan sa halip na mapababa ito sa panahon ng pandemya, iginiit naman ni Senator Joel Villanueva ang kahalagahan na gawin itong permanente sa pamamagitan ng pag-amyenda ng batas.

Kasabay nito, pinuri din ng senador ang Department of Finance sa pagpapatigil sa maling implementasyon ng BIR ng kapapasa lamang na Corporate Recovery and Tax Incentives for Enterprises Act (CREATE Act) nang taasan nito sa halip na liitan ang buwis ng mga paaralan.

"Ito po ang kailangan natin na 'academic revenue freeze.' Dagdag na tulong, hindi dagdag na buwis ang kailangan ng mga pribadong paaralan sa panahon ng pandemya. Wala pong revenue loss dito," ani Villanueva, chair ng Senate higher and technical and vocational education.

"Nagpapasalamat po tayo sa Department of Finance sa pagtutuwid ng interpretasyon ng batas na maglalagay sa kapahamakan ng mga paaralan na tulad ng isang na-COVID ay naghihingalo," dagdag ng mambabatas.

Naglabas ang DOF ng BIR Revenue Regulation No. 14-2021 noong Hulyo 26 na naglalaman ng pansamantalang suspensyon ng bisa ng BIR RR 5-2021 na nagpapataw ng 25% tax rate sa mga eskwelahan na mas malaki pa sa dating 10% na tax rate bago mag-pandemya. Layunin ng CREATE na tumulong sa mga kumpanya tulad ng mga pribadong paaralan, hindi ang maging pabigat pa, ayon sa senador.

Ikinalugod ni Villanueva ang suspensyon, at nanawagan sa kanyang mga kasamahan sa Kongreso na suportahan ang Senate Bill No. 2272, ang panukalang maglilinaw ng pagtatakda ng batas upang maging mas klaro ang interpretasyon. Isa si Villanueva sa mga may-akda at sponsor ng panukala kasama si Senator Sonny Angara.

"Hindi po nakaukit sa bato ang isang batas. The challenge now is on the House and the Senate to pass the amendatory bill. The revenue regulation is a conditional freeze. It is up to the legislature to make it permanent," ani Villanueva.

Dagdag pa ng senador, ang pagpapatigil ng implementasyon ng naturang regulasyon ay makakatulong pa umano sa gobyerno dahil mababawasan ang gastos sa edukasyon kapag napilitang magsara ang mga pribadong eskwelahan at maglipatan ang mga estudyante sa pampublikong paaralan.

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