RR No. 5-2019: Implements the tax incentives provisions of RA No. 10771 (Philippine Green Jobs Act of 2016)

Key points

1. Covered enterprises. The regulations cover establishments that produce, manufacture, process, repack, assemble or sell goods or services, including service-oriented enterprises. This includes self-employed or own-account workers, MSMEs, and community-based enterprises certified by the Secretary of the Climate Change Commission or a duly authorized representative.
2. 50% special deduction. A qualified business enterprise may deduct from taxable income 50% of its total skills training and research development expenses. The deduction is over and above the ordinary and necessary business deductions allowed for those expenses under the Tax Code of 1997, as amended.
3. Conditions for the deduction. The deduction is taken in the taxable year the expenses are paid or incurred. The taxpayer must prove the amount and the direct connection to skills training and research development with evidence such as official receipts, delivery receipts and other adequate records.
4. Registration step. The enterprise registers or updates its registration with the BIR. It submits the Climate Change Commission certification of qualification to the Revenue District Office where it is registered.
5. Documents with the return. When filing the Income Tax Return or Annual Information Return, the enterprise gives the Revenue District Officer three sworn items: a list of total expenses, a list of activities and projects with their costs and how the expenses were paid or incurred, and a declaration that the expenses relate directly to activities that generate and sustain green jobs.
6. Where and when to claim. The claim is filed together with the Income Tax Return. The return and the Annual Information Return are filed with the Revenue District Office where the enterprise is registered.

Who is affected

• Self-employed or own-account workers
• Micro, small and medium enterprises (MSMEs)
• Community-based enterprises certified by the Climate Change Commission

Deadlines and effectivity

• Issued April 12, 2019
• Deduction taken in the taxable year the expenses are paid or incurred
• Claim filed at the time of filing the Income Tax Return