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Implementing the Tax Incentives Provisions of the "Philippine Green Jobs Act of 2016"

A revenue regulation was published on the BIR website on the 12th of April, providing the rules and procedures of availing the tax incentives provided in Republic Act No. 10771 for qualified business enterprises  that are engaged in green economy. The incentives are the entitlement of a special deduction from taxable income equivalent to 50% of  the  total expense  for skills  training   and  research  development  expenses during the taxable year. The said revenue regulation is provided below.

April 12, 2019

REVENUE REGULATION 5-2019

Subject: Implementing the Tax  Incentives Provisions of Republic Act  No. 10771, Otherwise Known  as the "Philippine Green .Jobs Act of 2016"

TO : All Internal Revenue  Officers  and Others  Concerned


SECTION 1.  SCOPE. - Pursuant to Section  244  of the National  Internal  Revenue Code of 1997 (Tax  Code), as amended, the following Regulations  are hereby  promulgated to implement  the tax  provisions  of R.A.  No.  10771 otherwise known as the "Philippine Green Jobs Act of 2016'.

SECTION  2.  DEFINITION  OF TERMS. - For  purposes  of these  Regulations, the following terms are operationally defined  as follows:

(a) Business enterprises refer to establishments engaged in the production, manufacturing, processing,  repacking,  assembly, or sale of goods  and/or services,  including service-oriented enterprises.   They shall include (1) self-employed or own-account workers; (2) micro, small  and medium enterprises (MSMEs);  and (3) community-based enterprises;

(b) Climate  change refers to a change  in climate that can be identified  by changes  in the mean or variability  of its properties and that persists  for an extended  period  typically decades or longer, whether due to natural variability or as a result of human  activity;

(c) Green building practices refer to the adoption  of measures that promote  resource management efficiency and site sustainability  while minimizing  the negative  impact  of buildings  on human health and the environment;

(d)  Green  economy refers to one which is low-carbon  and resource-efficient, and results  in the generation of green jobs and in improved human  well-being and social equity, while significantly reducing environmental risks and ecological  scarcities.

(e) Green  goods  and services refer  to goods and services  that benefit the environment or conserve  natural resources, and may include research  and development, installation and maintenance services.

(f) Green jobs refers to employment that contributes to preserving or restoring the quality of the environment, be it in the agriculture, industry or services sector. Specifically but not exclusively, this includes jobs that help to protect the ecosystems and biodiversity, reduce energy, materials, and water consumption through high effeciency strategies, decarbonize the economy, and minimize or altogether avoid generation of all forms of waste and pollution. Green jobs are decent jobs that are productive, respect the rights of workers, deliver a fair income, provide security in the workplace and social protection for families and promote social dialogue;

(g) Green  technologies refer  to the  development and  application of products, equipment and systems used to conserve the environment and natural  resources:

(h)  Sustainable development refers  to  development that  meets  the  needs   of  the  present generation without  compromising the  ability  of future  generations to  meet  their  own needs:

(i)  Application for  tax  incentives or  tax  exemption shall  refer  to the  application by the qualified  business enterprise as certified by the Secretary of the Climate Change Commission or his duly  authorized representative for  additional special deduction in arriving  at the net taxable  income.

SECTION 3. COVERAGE. - Qualified "business enterprises" as defined in Section 2(a)  of these Regulations duly certified by the Secretary of the Climate  Change Commission or his duly authorized representative.

SECTION  4.   TAX  INCENTIVES. - A qualified   business enterprise shall  be entitled to  a special  deduction from  the taxable income  equivalent to fifty  percent (50%)  of  the  total expense  for skills  training   and  research  development  expenses  subject  to  the  following conditions:

(1) That the deduction shall be availed  of in the taxable year in which  the expenses have been  paid or incurred:

(2) That  the  taxpayer can substantiate the deduction with  sufficient evidence, such  as official  receipts, delivery  receipts and other  adequate records  -

(2.1) The amount  of expenses being  claimed as deduction;

(2.2) The  direct  connection or relation  of the expenses incurred for  skills  training and research development of the  business enterprise:

(3) Such  special   deductions shall  be over  and  above  the  allowable and  ordinary  and necessary business  deductions for  said  expenses under  the  Tax  Code  of  1997, as amended

SECTION 5. PROCEDURES FOR AVAILMENT OF TAX INCENTIVES. - In  order  to avail  of the tax incentives provided for under these  Regulations. qualified business enterprise shall:

(1) Register or update its registration by submitting with the Revenue District Office, where the qualified business enterprise is registered, the certification issued by the Climate Change Commission that the enterprise is qualified to avail the incentives;

(2) Upon filing the income tax returns /annual information returns, furnish the Revenue District Officer of the place where the said qualified business enterprise is registered , the following:

 a) A sworn list of total expenses paid or incurred for skills training and research development during the year,

 b) A sworn  list of the  activities and/or projects  undertaken by the  institution and the cost of each undertaking indicating in particular where  and how the expenses  were paid or incurred.

c) A sworn declaration that  the  expenses paid  or incurred for  skills training, research  development has  a direct  connection  or  relation to  the  activities and/or  projects of the  business enterprise that  generate and  sustain green jobs.

SECTION 6. DATE AND PLACE OF FILING RETURNS. -

(a)  Time  of Filing.- Claims for special  deduction of 50% of the  total  expense for skills training and  research development expenses by the  qualified  business  enterprise shall  be filed at the time  of filing  of the income  tax returns.

(b)  Place  of Filing.- The  income  tax return  and/or  the annual information return  of the qualified business  enterprise shall  be filed  in the Revenue  District Office where  the qualified  business  enterprise is registered.

SECTION 7.   REPEALING CLAUSE. - All revenue  rules and  regulations, and  other revenue issuances or parts  thereof, which  are  inconsistent with these  Regulations are  hereby repealed or modified accordingly.

SECTION 8. EFFECTIVITY.- These  Regulations shall take  effect  fifteen (15) days after  publication in the Official  Gazette  or in a newspaper  of general   circulation, whichever comes first.


(Original Signed)
CARLOS G. DOMINGUEZ III
Secretary of Finance

Recommending Approval:

(Original Signed)
CAESAR R. DULAY
Commissioner of Internal Revenue

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About Vincent Perdiguez

The above article was shared by Vincent on this website. He is currently working as a government employee. He is an accountant by profession and his field of interest is audit and taxation. He is writing about business and he loves sharing his knowledge. He is also a practicing Christian and loves to talk about the Bible. He is an active promoter of the 1611 King James Bible. You can reach him through email at cpadavao@gmail.com or through mobile number +63-916-276-4585. You can also post your comments or suggestions about the subject below. Thank you for subscribing to us!
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