Question & AnswerQ&A (DENR ADMINISTRATIVE ORDER NO. 2004-53)
The guidelines are issued pursuant to Section 13 of Article 1, Chapter II of Republic Act No. 8749 (Philippine Clean Air Act of 1999) and Section 1 of Rule XXIII of DAO 2000-81, the Implementing Rules and Regulations (IRR) for RA 8749.
These guidelines apply to industries that install pollution control devices or retrofit existing facilities with pollution-reducing mechanisms to comply with air quality standards set under the Philippine Clean Air Act and its IRR.
A Qualified Enterprise is any individual, partnership, cooperative, corporation, or other entity organized under Philippine laws that installs pollution control devices or retrofits existing facilities to comply with emission standards as evidenced by a valid Permit to Operate (P/O) issued by the Environmental Management Bureau (EMB).
Tax incentives include accelerated depreciation of pollution control devices, deductibility of research and development expenditures on pollution reduction, and input tax credits on purchases or importations of pollution control devices and related supplies.
The qualified enterprise may use the straight-line method, declining-balance method (up to twice the straight-line rate), sum-of-the-years digit method, or any other method prescribed by the Secretary of Finance upon recommendation of the BIR Commissioner.
The enterprise must secure a Permit to Operate (P/O) from the EMB, which serves as proof of eligibility when claiming tax incentives.
Yes, pursuant to Section 234(e) of the Local Government Code, machinery and equipment used for pollution control and environmental protection are exempt from real property tax.
The P/O is valid only within the taxable year in which the tax incentives are claimed.
The EMB shall conduct technical inspections to verify that pollution control devices are properly installed and used. The enterprise must provide sampling test results or mathematical computation for verification.
They shall be subject to penalties under Title X – Statutory Offenses and Penalties of the NIRC and may also face prosecution under other laws such as Section 47 of the Philippine Clean Air Act.