REVENUE REGULATIONS (RR) NO. 13-2025
This RR is issued to implement programs aimed at encouraging private sector participation in upgrading and modernizing educational institutions in the Philippines.
Pursuant to Sections 244 and 245 of the National Internal Revenue Code (NIRC), as amended, these regulations are hereby promulgated to consolidate the provisions of RR No. 10-2003 and Sections 294(C)(2) and (4) of the Tax Code. This is to ensure the efficient and effective implementation of the tax incentives granted under Sections 5 and 6 of RA No. 8525, (Adopt-a-School Act of 1998), RA No. 12063 (Enterprise-Based Education and Training (EBET) Framework Act), and the Tax Code, and relevant provisions of the NIRC.
| Incentives to registered export and domestic enterprises under Section 294(C)(2) And (C)(4) of The Tax Code | |
| Incentives | Conditions and Limitations |
| 50% additional deduction on the labor expense incurred in the taxable year. | The aforementioned deduction shall not include salaries, wages, benefits, and other personnel costs incurred for managerial, administrative, indirect labor and support services; and |
| 100% additional deduction on training expenses incurred in the taxable year | The additional training expense shall only apply to trainings, as approved by the Strategic Investment Priority Plan, given to the Filipino employees engaged directly in the registered business enterprise’s production of goods and services. |
To avail the incentives, the applicant shall attach to its Income Tax Return (ITR) the certification from DepEd or CHED or TESDA and a Sworn Declaration issued by Applicant and its authorized officer as to the amount of the expenses being deducted and that the Applicant has the requisite qualifications to avail the Incentives. The Applicant shall also keep the invoices and other supporting documents to support the expenses for BIR post-audit purposes.
| Incentives granted to private entities under RA No. 8525, as implemented by RR No. 10-2003 (Adopt-a-School program) | |
| Incentives granted to Adopting Private Entities | Section 34(H) of the Tax Code and an additional 50% of such contribution/ donation subject to the following conditions: Deduction shall only be availed in the taxable year in which it has incurred or paid;Shall be substantiated with appropriate evidence, such as Invoices and other adequate records:The amount of being claimed as a deduction; |
| Incentives granted to private entities under RA No. 8525, as implemented by RR No. 10-2003 (Adopt-a-School program) | |
| Incentives granted to Adopting Private Entities | Direct connection of the expenses to the participation of Adopt-a-School Program and list of projects and/or activities undertaken at the cost of each undertaking, indicating in particular where and how the assistance has been utilized and supported by agreement; and Proof or acknowledgement of receipt of the contributed/donated property by the recipient of public school.Exemption from donor’s tax prescribed under Section 101(A)(2) and (B)(2) of the Tax Code. Adopting Private Entities refers to an individual engaged in trade, business, or profession, or any business organization that partners with DepEd, CHED, or TESDA to provide assistance and services to public schools. Foreign donation – The VAT and excise tax on importation shall be assumed by the DepEd, CHED or TESDA, as the consignee or the importer except if the importation is exempt from VAT. VAT in importation payable by national government agency to the National Government arising from the subject foreign donation shall be considered as expenditure of the government pursuant to the provisions of Government Appropriations Act (GAA) as determined by the Congress annually. Local donation – Classified as a “transaction deemed sale” of goods or properties shall be subject to VAT on the day of the transfer of the goods or properties. The donor is entitled to claim the available input tax subject to the rules on allocation among taxable sales, zero rated sales the donee (public school) will be considered as the final consumer and will not be entitled to any input VAT. If the local donation is not considered as a “transaction deemed sale” it shall be exempt to VAT. |
| Incentives granted to private entities under RA No. 8525, as implemented by RR No. 10-2003 (Adopt-a-School program) | |
Availment of tax exemption and incentives. | The Adopting Private Entity shall attach to its donor’s tax return and ITR for the period when the donation is made and deduction is claimed, for substantiation purposes, the original or certified true copy must be presented:Agreement between the Adopting Private Entity and the public school, as endorsed by the National Secretariat;Notarized Deed of Donation and Acceptance; andSworn Declaration issued by the authorized officer of the Adopting Private Entity. The mentioned entity shall provide a list of projects and/or activities undertaken and the cost of each undertaking, indicating where and how the assistance has been utilized as supported by agreement. The Adopting Private Entity shall keep the official invoices and other supporting documents to supporting documents to support the expenses for BIR audit purposes. |
| Incentives granted to Technical-Vocational Institutions (TVIs) implementing a registered Enterprise-Based Education and Training (EBET) Framework under RA No. 12063 | |
| Incentives grated to TVIs | Additional deduction from taxable income equivalent to 50% of actual training expenses from the effectivity of RA No. 12063 up to December 31, 2027; provided that additional deduction shall increase from to 75% of the actual training expenses starting January 1, 2028 but it shall not exceed 5% of the total direct labor expenses or ₱ 25,000,000 a year, whichever is lower. The enterprise shall secure the proper certification from the TESDA. Donations, contributions, bequests, subsidies, or financial aid actually paid or made to a TVI implementing theoretical instructions for EBET Programs within the taxable year shall be exempt from payment of donor’s tax and shall be deductible from the gross income of the donor, subject to the provisions of the Tax Code. TVI is not required to obtain accreditation, notwithstanding any law to the contrary, but they shall secure the certification from the TESDA.Donation, contribution, bequests, subsidies, or financial aid which are certified by the TESDA to be actually, directly and exclusively for the conduct of a registered EBET Program, shall be exempt from taxes and duties. |
| Incentives granted to Technical-Vocational Institutions (TVIs) implementing a registered Enterprise-Based Education and Training (EBET) Framework under RA No. 12063 | |
|---|---|
| Availment of tax exemption and incentives | To avail the additional deductions under (A)(i), the enterprise shall attach the following to its ITR: TESDA Certification; andSworn declaration issued by the authorized officer of the enterprise as to the amount of the expenses being deducted and that the enterprise has the requisite qualifications to avail of the incentives. Official invoices and other supporting documents to support the expenses for BIR post-audit services. The donor shall attach its donor’s income tax return and ITR for the period when the donation is made and deduction is claimed, the original or certified true copy of the following documents to support and substantiate its claim |
| Availment of tax exemption and incentives | Donor’s tax exemption and deduction of donations and contributions from the taxable income for income tax purposes, Notarized Deed of Donation and Acceptance; andTESDA certification that the donations, contributions, bequests, subsidies or financial aid are, directly and exclusively used for the conduct of a registered EBET Program. The enterprise shall also keep Official Receipts and other documents to support for BIR post audit services. |
Valuation of the Assistance/contribution or donation made by private entities to educational institutions covered by these regulations
| TYPE OF VALUATION | BASIS |
| Cash Assistance/contribution or donation | shall be based on actual amount contributed/donated appearing in the official invoices of the donee. |
| Personal Property | shall be based on Acquisition Cost (AC) of the mentioned assistance or contribution. If such property has already been used, the property shall be depreciated. |
| Consumable goods | shall be based on AC by the donor or the actual cost at the time of the donation, whichever is lower. |
| TYPE OF VALUATION | BASIS |
| Services | This shall be based on the value of the services rendered as agreed upon by the donor and the service provider and the educational institution as fixed in the agreement, or the actual expenses incurred – by the donor. Whichever is lower. |
| Real Property | This shall be based in the fair market value of the property at the time of contribution as determined pursuant to RA No. 12001 or Section (6)(E) of the Tax Code or the book value of the property whichever is lower. Appraisal of the asset recorded in the books shall not be considered. |
Rules on availment tax exemptions and Incentives
Applicants shall indicate legal basis of the exemption and incentives availed on the “Special Allowance Itemized deduction” field of the ITR.
Role of the Government agencies granting incentives
Government agencies offering incentives must submit a master list of entities with granted or canceled incentives. This list, which should include information required for audit verification by the BIR, is due within 20 days after the end of each taxable quarter. Specific guidelines for the list will be provided in a separate issuance.
Conduct of the Post audit of the BIR
Any pending tax exemption requests with the BIR will be considered approved if the applicant meets all qualification requirements upon the regulation’s effectivity. The applicant must submit the necessary documents to the BIR during audits to confirm compliance. Failure to comply will lead to disallowance of claimed expenses and tax exemptions. This regulation takes effect 15 days after publication in the official Gazette or on the BIR’s official website, whichever is sooner.