Tax Updates January 2022 (SyCipLaw Tax Issues And Practical Solutions (T.I.P.S.) Vol. 15)

1.What tax relief can private schools look forward to?

On December 10, 2021, the President signed into law Republic Act (R.A.) No. 11635 amending Section 27(B) of the National Internal Revenue Code, as amended (Tax Code). R.A. No. 11635 provides that the taxable income of qualified proprietary educational institutions is subject to the 10% corporate income tax rate (or 1% from July 1, 2020 until June 30, 2023 as provided under R.A. No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act). If the gross income of a private or proprietary educational institution arising from trade, business or other activity that is not substantially related to the exercise or performance of its primary purposes or function exceeds 50% of the total gross income derived from all sources, the general regular income tax rate of 25% will be imposed on the entire taxable income. A 'proprietary educational institution' is defined as any private school maintained and