THE Bureau of Internal Revenue has issued Revenue Regulations 5-2019, implementing the tax incentives provisions of Republic Act (RA) 10771, or the “Philippine Green Jobs Act of 2016.”
To promote a green economy, RA 10771 provides incentives to enterprises that promote or provide green goods and services, green jobs, green technologies and sustainable development. Such businesses may approach the Climate Change Commission and request a certification to be considered qualified.
Qualified business enterprises are entitled to a special deduction from their taxable income equivalent to 50 percent of the total expense for skills training and research and development. However certain conditions must be followed:
- The deduction must be availed of on the taxable year when the expenses were paid or incurred;
- The taxpayer can substantiate the deduction with sufficient evidence, such as official receipts, delivery receipts, and other adequate records—the amount of expenses claimed as deduction; the direct connection or relation of the expenses incurred for skills training and research and development;
- Such special deductions will be over and above the allowable, ordinary, and necessary business deductions for said expenses under the Tax Code of 1997, as amended.
To avail themselves of the incentives, the qualified business enterprise must:
- Register or update its registration with the revenue district office where the qualified business enterprise is registered, and present the certification issued by the Climate Change Commission.
- Upon filing their income tax returns/annual information returns with the revenue district where the business enterprise is registered with, furnish and attach the following documents:
- Sworn list of the total expenses paid or incurred for skills training and research and development during the year;
- Sworn list of activities and/or projects undertaken by the organization and the cost of each undertaking, particularly indicating where and how the expenses were paid or incurred.
- Sworn declaration that the expenses paid or incurred for skills training and research and development has direct connection or relation to the activities and/or projects of the business enterprise, generating and sustaining green jobs.
P&A GRANT THORNTON
Certified Public Accountants
P&A Grant Thornton is the Philippine member firm of Grant Thornton International Ltd.