Question & AnswerQ&A (BIR REVENUE REGULATIONS NO. 1-99)
The regulation implements tax incentives under Section 3(b) and 3(d) of RA No. 8502, the Jewelry Industry Development Act of 1998, particularly excise tax exemption and additional deduction for training expenses for qualified jewelry enterprises.
A Qualified Jewelry Enterprise is an enterprise engaged in jewelry manufacturing and related activities, duly registered and accredited by the Board of Investment (BOI) and categorized by asset size, involved in production of fine or imitation jewelry, gemstone cutting, refining, plating, and related support services.
All goods known commercially as jewelry, whether real or imitation pearls, precious and semi-precious stones and imitations, as well as goods made of or ornamented with precious metals or their imitations as specified in Section 150(a) of the National Internal Revenue Code.
The enterprise must be registered with the proper Revenue District Office, have a BIR Certificate of Exemption from Excise Tax, submit application for Permit to Import with supporting documents, and secure Authority to Release Imported Goods (ATRIG) with excise tax exempt stamp, subject to monitoring by BIR officers.
A Qualified Jewelry Enterprise may claim an additional deduction of 50% of expenses incurred in approved training schemes, in addition to ordinary deductible expenses, to reduce taxable income for the year the expenses were incurred.
The Technical Education and Skills Development Authority (TESDA) must approve and certify the training schemes including their conduct and effectiveness for the additional deduction to be granted.
Qualified Jewelry Enterprises that make fraudulent claims, submit incorrect information, or maintain false records shall be subject to penalties under Title X of the National Internal Revenue Code of 1997, including possible prosecution under other applicable laws.
They must keep books of accounts and other pertinent records as provided under Title IX, Chapter 1, Section 235 of the National Internal Revenue Code, which are subject to inspection by authorized revenue officers.
The regulations take effect fifteen (15) days after publication. Incentives commence on the date of accreditation but not earlier than July 9, 1998, the effective date of RA 8502.
They must file a sworn semestral report every January 15 and July 15 showing the products manufactured, produced, or imported, with their gross selling price or market value, excluding VAT.