The preferential tax rate is given to PEIs, provided that incomes received from unrelated business or other activities do not exceed 50% of the total revenues for the taxable year otherwise, PEIs may be subject to the regular corporate income tax on the entire amount of taxable income. The Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, however, granted reprieve to PEIs by lowering the tax rate to 1% of net taxable income from Jto June 30, 2023. PEIs that are registered as domestic corporations are subject to a preferential income tax rate of 10% based on net taxable income. PEIs may be registered as domestic corporations, partnerships, or other recognized entities under the law, provided that they are registered and adhere to the rules and regulations of either the DepEd, Commission on Higher Education (CHED), or the Technical Educations and Skills Development Authority (TESDA). PEIs, commonly known as “private schools”, are educational institutions which are managed and administered by private individuals, groups or stockholders. Lesson 1: What’s the income tax rate of educational institutions again?īefore we discuss the income taxation of schools in the Philippines, it is important to determine the corporate structure of the school, which will be used to classify it either as a proprietary education institution (PEI), a non-stock, non-profit educational institution (NSNP-EI), or a government educational institution (GEI). So, to all educators and school administrators, grab your pen and papers (or your tablet, as what the kids would say), it’s time to take a refresher course for the taxation of educational institutions. Along with the increase in enrollees and subsequently, tuition fees, educational institutions are still subject to some form of tax. This optimism for increased enrollees, however, does come with its tax effects. Hopefully, academic year 2022-2023 could pose an increase in enrollees, though initial numbers from the Department of Education (DepEd) prove to be optimistic. Admittedly, private schools took a hit as students transferred to the public-school systems or stopped school altogether. Zoom classes can take the side road for the meantime while students flock back to schools for their first-ever in-person classes since the pandemic.Īt the onset of the pandemic, a plunge was seen in the number of enrollees especially in academic year 2020-2021, mainly due to pandemic-driven economic and social factors and a hesitancy to transition to the alternative modes of learning. While summer 2022 might have been momentary, the youth can very well look forward to the implementation of face-to-face classes. Yesterday marked the end of beach days for students as they officially start a new academic year.
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