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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
To encourage business enterprises to generate and sustain green jobs, the Philippine Green Jobs Act of 2016 provides that businesses enterprises shall enjoy generous incentives, namely: a special deduction from the taxable income equivalent to fifty percent (50%), and tax and duty free importation of capital equipment, both subject to certain conditions.
To implement these tax incentives, the Bureau of Internal Revenue (BIR) issued Revenue Regulations No. 5 series of 2019 (RR No. 5-2019). Some notable points under RR No. 5-2019 are those on: business enterprises qualified to receive the tax incentives; the computation of the tax incentives; and the procedures to avail the tax incentives.
The Philippine Green Jobs Act of 2016 or Republic Act (RA) No. 10771, was a major piece of legislation designed to promote the sustainable development of the country and its transition into a green economy, and to create and maintain green jobs.
“Green Economy” refers to an economy that is low-carbon and resource-efficient, and results in the generation of green jobs while significantly reducing environmental risks and the declining availability of natural resources. Meanwhile, “green jobs” are jobs that contribute to preserving or restoring the quality of the environment (Sec. 4, RA).
To encourage business enterprises to generate and sustain green jobs, the Philippine Green Jobs Act provides that businesses enterprises shall enjoy generous incentives, namely:
- Special deduction from the taxable income equivalent to fifty percent (50%) of the total expenses for skills training and research development expenses which is over and above the allowable ordinary and necessary business deductions for said expenses; and
- Tax and duty free importation of capital equipment, so long as the capital equipment is actually, directly and exclusively used in the promotion of green jobs of the business enterprise (Sec. 5, RA 10771).
To implement the above tax incentives under the Act, the Bureau of Internal Revenue (BIR) issued Revenue Regulations No. 5 series of 2019 (RR No. 5-2019). Some notable points under RR No. 5-2019 are those on: business enterprises qualified to receive the tax incentives; the computation of the tax incentives; and the procedures to avail the tax incentives.
Qualified Business Enterprises
“Business enterprises” under Philippine Green Jobs Act of 2016 and RR No. 5-2019 refer to those establishments engaged in the production, manufacturing, processing, repacking, assembly, or sale of goods and/or services. They include:
- self-employed or own-account workers;
- micro, small, and medium enterprises (MSMEs); and,
- community-based business enterprises.
“Qualified business enterprises” refer to business enterprises duly certified by the Climate Change Commission as qualified to avail tax incentives under the Philippine Green Jobs Act of 2016.
Tax Incentives
The taxable income of a qualified business enterprise is entitled to a special deduction of fifty (50%) of its total expense for skills training and research development expenses. However, this special deduction is subject to conditions, namely:
1. That the deduction shall be availed of in the taxable year when the expenses have been paid or incurred;
2. That the taxpayer provides evidence in support of the deduction, and proves
-
- The amount of expenses being claimed as deduction; and
- The direct connection or relation of the expenses incurred for skills training and research development of the business enterprise.
Examples of proof allowed by the RR are official receipts and delivery receipts.
3. The special deduction shall be over and above the allowable and ordinary and necessary business deductions for said expense under the Tax Code
Procedures to Avail Tax Incentives
To avail of the above tax incentives, the qualified business enterprise must:
- Register or update its registration by submitting the certification issued by Climate Change Commission to the Revenue District Office (RDO) where the qualified enterprise is registered;
- When filing the income tax return (ITR) and/or annual information return, submit as well the following documents to the RDO:
- A sworn list of the total expenses paid or incurred for the skills training and research development during the year;
- A sworn list of the activities and/or projects and the cost of each activity and/or project, indicating how the expenses were paid or incurred;
- A sworn declaration that the expenses paid or incurred have a direct connection to the activities and/or projects of the business enterprise that generate and sustain green jobs.
Date and Place of Filing Returns
- Claims for the special fifty percent (50%) deduction shall be filed at the time of filing the ITR;
- The ITR and/or the annual information return of the qualified business enterprise shall be filed with the RDO where the qualified business enterprise is registered.
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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 0917-5772207/ 09778050020.
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