BIR urged to suspend imposition of tax hike on private schools

Robie de Guzman   •   June 9, 2021   •   663

MANILA, Philippines – Senator Sherwin Gatchalian on Wednesday called on the Bureau of Internal Revenue (BIR) to suspend the imposition of a 25 percent corporate income tax on private schools, warning that the added burden on struggling institutions amid the coronavirus pandemic could lead to more school closures, job losses, and a more restricted access to education.

In a statement, Gatchalian said BIR’s Revenue Regulation (RR) 5-2021 runs counter to the intention of the Corporate Recovery and Tax Incentives for Enterprises Act or the CREATE Act (Republic Act No. 11534) which seeks to impose a one percent tax rate on proprietary educational institutions for a three-year period.

The law also provides that these institutions have to pay ten percent tax on their taxable income, he added.

Under the CREATE Law, ‘proprietary’ means a private hospital or private school maintained and administered by private individuals or groups. These institutions should have an issued permit to operate from the Department of Education (DepEd), the Commission on Higher Education (CHED), and the Technical Education and Skills Development Authority (TESDA).

But based on RR 5-2021, proprietary educational institutions have to be non-profit to avail of the reduced tax rate.

“If these rules are imposed, private schools’ income tax rate would increase by 150 percent,” said Gatchalian, who chairs the Senate Committee on Basic Education, Arts and Culture.

In an earlier statement, Gatchalian called the tax rule “ill-timed” considering how private schools are trying to stay afloat.

The senator cited the March 2021 Labor Force Survey, which showed that the education sub-industry had the largest decrease in the number of employed persons from February to March 2021 at 248,000.

He noted that last February, DepEd reported that 929 private schools did not operate for the school year (SY) 2020-2021. The Coordinating Council of Private Educational Associations (COCOPEA) also said in a statement that enrollment in private K-12 schools dropped by over 900,000 compared to the previous school year.

“Sa panahong karamihan sa ating mga private schools ay nahihirapang magpatuloy ng operasyon sa gitna ng pandemya, hindi napapanahon at hindi tamang patawan natin sila ng karagdagang buwis bilang dagdag pasanin,” Gatchalian said.

The senator likewise said that he is mulling to file a resolution that would urge the BIR to suspend the imposition of the tax hike on private schools.

 

Lacson, Gatchalian test positive for COVID-19

Maris Federez   •   January 7, 2022

MANILA, Philippines — Senators Panfilo Lacson and Sherwin Gatchalian have tested positive for coronavirus disease 2019 (COVID-19).

In a Twitter post on Friday, Lacson confirmed that he has contracted the virulent virus after undergoing the test on January 4.

He said he has informed all his close contacts since January 3 about his condition and advised them to take the necessary precaution.

“Immediately informed all my Jan 3 physical contacts of my Jan 4 COVID-positive test result which was released only last night, Jan 6 so they can take extra precautions to protect their loved ones and others. Thank God no one is exhibiting symptoms. Wearing our masks helped much,” Lacson said.

Meanwhile, Gatchalian announced his COVID-19 positive result in a Viber message to Senate reporters.

Gatchalian said he tested positive Friday but only experienced mild symptoms.

The senator assured that he is following strict health protocols by self-quarantining away from family members, friends, and the public.

He also appealed to the public to get vaccinated and boosted.

“This is to inform the public that I tested positive for COVID-19 today. Following strict health protocols, I went on self-quarantine away from family, friends, and the public,” he said.

“So far, I am only experiencing mild symptoms from the virus and this goes to show that the vaccines are effective and working against it. I enjoin everyone to get your booster shots right away,” he added. —/mbmf

BBM camp proves Marcos paid taxes

Maris Federez   •   December 22, 2021

 

MANILA, Philippines — The camp of presidential aspirant Ferdinand ‘Bongbong’ Marcos, Jr. on Wednesday showed proof that the former senator has no unsettled tax deficiencies.

Non-payment of taxes is one of the issues presented by proponents of petitions that seek the cancellation of Marcos’ candidacy in the May 2022 elections.

BBM spokesperson Atty. Vic Rodriguez said their move is to finally put a stop to the issue that they claim is intended to smear the BBM-Sara tandem.

Atty. Rodriguez showed the document certified by the Bureau of Internal Revenue (BIR) to prove that Marcos paid taxes.

The certification from the BIR issued on December 9 showed that the former lawmaker has paid the taxes and the penalties meted out by the Quezon City RTC on his tax case in 1995.

The document also showed that Marcos settled his taxes plus penalties on December 27, 2001, amounting to Php67,137.27 that the Court of Tax Appeals ordered him to pay.

“Wala hong pagkakautang si Ferdinand Bongbong Marcos, Jr. na buwis or  tax deficiency, penalty or interest bayad ho at binayaran nang matagal nang panahon noong hong date paid December 27, 2001,” Rodriguez said.

Rodriguez also insisted that the document addresses the petition of the group of former Supreme Court Spokesperson Atty. Theodore Te seeking the cancellation of Marcos’ candidacy and the removal of his name from the list of presidential candidates on the official ballot.

“Ipinakita ko na ho yong aming ebidensya at I guess this will give some source of joy, cheers, and smile to the supporters of Bongbong Marcos and Mayor Inday Sara Duterte,” Rodriguez said. —/mbmf (from the report of UNTV Correspondent Dante Amento)

BIR to probe tax compliance of initial 250 social media influencers

Robie de Guzman   •   September 16, 2021

MANILA, Philippines – The Bureau of Internal Revenue (BIR) is set to launch an investigation into the initial list of 250 social media influencers to check on their tax compliance.

In a report to Department of Finance (DOF) Secretary Carlos Dominguez III, the BIR said that Letters of Authority (LOAs) for the conduct of investigation have been issued to certain social media influencers found to be “top earners.”

The BIR said that social media personalities who earn money from their posts on digital media are classified as self-employed individuals or persons engaged in trade or business as sole proprietors.

Their earnings are generally considered as business income as defined under BIR’s Revenue Memorandum Circular (RMC) No. 97-2021 issued last Aug. 16, the bureau added.

“We encourage them to register, and then we have the profiling of over 250 personalities. We will do the investigation so that they would pay the necessary corresponding tax on their earnings,” BIR Deputy Commissioner Arnel Guballa said in his report to Dominguez.

Under RMC 97-2021 issued in August, social media influencers should pay income tax and percentage tax or, if applicable, the value-added tax (VAT), as mandated under the National Internal Revenue Code (NIRC) and other existing laws.

Based on the Circular, social media influencers are defined as those who derive their income from the following sources:

  1. a) You Tube Partner Program;
  2. b) sponsored social and blog posts;
  3. c) display advertising;
  4. d) becoming a brand representative/ambassador;
  5. e) affiliate marketing;
  6. f) co-creating product lines;
  7. g) promoting own products;
  8. h) photo and video sales;
  9. i) digital courses, subscriptions, e-books;
    j) podcasts and webinars

The Circular states, among others, that social media influencers who receive free goods in exchange for promotions must declare as income the fair market value of these products.

Income treated as royalties from another country, including payments under the YouTube Partner Program, shall likewise be included in the computation of the gross income of the socmed influencer and shall be subject to tax.

“It must be emphasized that the BIR also has the power to obtain information from foreign tax authorities pursuant to the Exchange of Information (EOI) provision of the relevant tax treaties. The BIR has the means to verify their income as it is clothed with a special power to obtain information from its treaty partners. The BIR may safely rely on the data provided by its treaty partners to establish the influencer’s tax liability,” RMC 97-2021 stated.

“The social media influencers are, therefore, advised to voluntary and truthfully declare their income and pay their corresponding taxes without waiting for a formal investigation to be conducted by the BIR to avoid being liable for tax evasion and for the civil penalty of fifty percent (50 percent) of the tax or of the deficiency tax,” it added.

In order to avoid the risks of double taxation, the BIR advised social media influencers receiving income from a non-resident person residing in a country, with which the Philippines has a tax treaty, to inform the latter that they are residents of the Philippines, and are, therefore, entitled to claim treaty benefits provided under the relevant tax agreement.

The Circular said social media influencers who “willfully attempt to evade the payment of tax or willfully fail to make a tax return, to supply accurate and correct information or to pay tax” shall, in addition to the payment of taxes and corresponding penalties, be held criminally liable under the Tax Code.

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