In a statement released recently by COCOPEA or the Coordinating Council of Private Educational Associations, its private school members unequivocably called for the immediate rectification of Revenue Regulation 5-2021 (“RR 5-2021”), a new tax regulation callously issued by the Bureau of Internal Revenue.

This tax policy, just issued on April 8, 2021, if enforced, will more than double the 10% tax rate applied to private schools since 1968, to 25%. This is highly questionable especially in the face of the economic slump under the current pandemic which has already caused the closure of no less than 900 of private learning institutions.

Moreover, this policy move totally ignores and in effect counters the spirit of the Corporate Recovery and Tax incentives for Enterprises Act or CREATE Act. This law was passed just last March 26 to grant tax relief for companies in financial need, provide transparent tax provisions, and further increase the competitiveness of the country. The Act is reportedly part of corporate fiscal reforms being undertaken by the country since 2019. Supposedly, it is time-bound and tailor-made to push corporate and tax reforms to counter the effects of COVID-19 on the Philippine economy. This law only set a 1% tax rate for non-profit ventures like private schools operations.

So why do we have this BIR Revenue Regulation 5-2021?


It needs to be underscored that private schools have been diligent, innovative, and agile partners of government in actually making education more accessible to Filipinos. How so? Private schools in the country cover many of those areas where the government is not able to provide institutions of learning for educational service delivery.

Today, private schools, especially the small ones in both urban and rural areas, even in far-flung towns of the country are in a most precarious position of battling the threats brought about by the global pandemic and now this new tax hike. Private sector investments in the education sector have become even more unviable.

In fact, as a case in point, even the well-known and over-a-century-old faith-based learning institution that is the College of the Holy Spirit in the very heart of the City of Manila will be closed down by the end of schoolyear 2021-2022. This case sadly demonstrates how enrolment in private schools from the basic up to the tertiary level has significantly shrunk and especially so with the onslaught of the pandemic.

Furthermore, another private school group, PACU or The Philippine Association of Colleges and Universities (PACU) in a survey conducted only this April has found out that “over fifty percent of their respondent member schools, which are private schools with higher education program offerings have experienced a decline in enrollment of ten to fifty plus percent in SY 2020-21 compared to the prior schoolyear.” This translates to over a million students, faculty and school personnel in private schools being displaced or losing jobs or academic programs to enroll to.

This does not even count the negative impact on allied services or businesses as a school in a community actually creates a local socio-economic ecosystem. This simply means that if a school closes, whether public or private, other businesses in the community are also negatively affected.

This is how, indeed, BIR’s RR 5–2021 puts at extreme risk the economic situation of more than 300,000 teachers and personnel in private learning institutions all across the archipelago.. It even negates the education nurturing government program called the GASTPE or Government Assistance to Students and Teachers in Private Education.

Even a cursory but sincere dialogue with private school owners and administrators should in fact reveal that these proprietary learning institutions, especially the smaller ones have, in fact, been on survival mode for the last several years and their situation has only been made worse by the pandemic and, now, this new tax policy regime, which only rubs salt on the deep wounds that the private school system has been bearing for many years.

Our policymakers, especially our financial governors or economic specialists, must consider that small private schools have been an alternative for low-income families who scrape the bottom to give private education to their children rather than send them to our typically congested, ill-equipped and understaffed public schools.

It is high time for a better appreciation of the private school sector and their continuing and profound contribution in not only decongesting public schools but also in providing wider access to quality education for the school-going public of the country in general.

Government needs to listen to the voice of private schools as represented by these groups COOPEA and PACU.

This is not the time to further regulate and levy more tax on these private sector service institutions. It is time to provide them with better public support via, for instance, an enhanced GASTPE program and to relax or rectify the new tax regime imposed on them.

Let us not make a bad situation even worse with an ill-conceived revenue policy.

Ignoring the Create Law and enforcing BIR’s RR 5–2021 is like rubbing salt on the wounds of our educational system.
In the interest of the whole nation, BIR’s RR 5–2021 must be rescinded and the private school system further supported to survive through these troubled times.