NEGROS Occidental Third District Representative Jose Francisco "Kiko" Benitez has congratulated private education advocates, as Republic Act 11635 that provides a clearer tax regime for private schools is now a law.
"Private schools can now avail of lower tax rate under Corporate Recovery and Tax Incentives for Enterprises (Create) Act - reducing operational costs during these challenging times, and hopefully providing fiscal space for new investments to transition to digital learning," Benitez said.
He made the statement after President Rodrigo Duterte signed a law reducing the preferential tax rate of 10 percent to one percent imposed on proprietary educational institutions.
Duterte signed the law on December 10, 2021, amending Section 27 of the National Internal Revenue Code of 1997.
Under the law, hospitals which are nonprofit and proprietary educational institutions shall pay a tax of 10 percent on their taxable income, provided that beginning July 1, 2020 until June 30, 2023, the tax rate imposed shall be 1 percent.
Proprietary education institutions refer to any private school maintained and administered by private individuals or groups with an issued permit to operate from the Department of Education (DepEd) or the Commission on Higher Education (Ched), or the Technical Education and Skills Development Authority (Tesda), as the case may be, based on existing laws and regulations.
The House of Representatives Ways and Means Committee led by Albay Representative Joey Salceda, who authored the bill, earlier said that the new law is expected to help private schools hire more teachers and keep existing staff through tax relief.
He noted that applying the reduced one percent preferential rate under RA 11534 or Create Act until 2023 would allow schools to save an equivalent of 3.43 percent of compensation expenses, which could help them rehire at least 12,996 teachers at the start of the next school year.
RA 11635 was passed by the Senate as Senate Bill 2407 on September 27, 2021 and adopted by the House as an amendment to House Bill 9913 on September 29, 2021.