Question & AnswerQ&A (Republic Act No. 11635)
According to Republic Act No. 11635, hospitals which are nonprofit and proprietary educational institutions shall pay a tax of ten percent (10%) on their taxable income, except during the period from July 1, 2020 to June 30, 2023, when the tax rate is one percent (1%).
The special tax rate period is from July 1, 2020 until June 30, 2023, during which the tax rate imposed on taxable income is one percent (1%).
If the gross income from unrelated trade, business or other activity exceeds fifty percent (50%) of the total gross income, the tax prescribed under Subsection (A) of Section 27 of the National Internal Revenue Code shall be imposed on the entire taxable income.
It means any trade, business, or other activity the conduct of which is not substantially related to the exercise or performance by such educational institution or hospital of its primary purpose or function.
It means any private school maintained and administered by private individuals or groups with an issued permit to operate from the Department of Education (DepEd), the Commission on Higher Education (CHED), or the Technical Education and Skills Development Authority (TESDA), in accordance with existing laws and regulations.
The Department of Finance is tasked with promulgating the necessary rules and regulations for the effective implementation of the provisions of this Act.
This Act shall take effect fifteen (15) days after its publication in the Official Gazette or in a newspaper of general circulation.
The separability clause states that other provisions of the Act which are not affected shall remain in full force and effect.
Yes, any laws, decrees, executive orders, rules or regulations, or parts thereof inconsistent with this Act are repealed, amended, or modified accordingly.
The provision recognizes the distinct nature of nonprofit and proprietary educational institutions and hospitals, imposing a low tax rate to presumably support their social purpose while still ensuring they contribute tax when engaging in unrelated business activities.