IN LINE with Republic Act (RA) 10771, otherwise known as the Philippine Green Jobs Act of 2016, the Bureau of Internal Revenue (BIR) has issued Revenue Regulations (RR) 5-2019 to clarify the coverage and tax perks of taxpayers who provide “green jobs.”
RR 5-2019 defines green jobs as employment that contributes to preserving or restoring the quality of the environment, be it in the agriculture, industry or services sector including, but not limited to, protecting ecosystems and biodiversity, reducing energy, materials and water consumption through high efficiency strategies, decarbonizing the economy, and minimizing or altogether avoiding the generation of all forms of waste and pollution.
Establishments—whether self-employed or own-account workers, micro, small and medium enterprises (MSMEs), and community-based enterprises—engaged in producing, manufacturing, processing, repacking, assembling or selling goods and/or services are considered qualified business enterprises.
Qualified business enterprises will be entitled to an additional deduction from the taxable income equivalent to 50 percent of the total skills training and research expenses, subject to the following conditions: that the deduction will be availed of in the taxable year when the expenses were paid or incurred, and that the taxpayer can substantiate the amount and direct connection of expense claimed as deduction with sufficient evidence, such as official receipts, delivery receipts and other records.
To avail of the tax incentives, qualified business enterprises must register or update their registration and submit the following documents with the revenue district office where they are registered: annual income tax returns/annual information return, sworn list of the total expenses paid or incurred for skills training and research development during the year, sworn list of activities and/or projects undertaken by the institution and the cost of each undertaking, particularly indicating where and how the expenses were paid or incurred, and sworn declaration that the expenses paid or incurred for skills training and research development are directly connected or related to the activities and/or projects of the business enterprise that generate and sustain green jobs.
Upon registering or updating the business registration, the Climate Change Commission will issue a certificate that the enterprise is qualified to avail of the incentives.
Source: P&A Grant Thornton