Question & AnswerQ&A (BIR REVENUE REGULATION NO. 10-96)
The main purpose of Republic Act No. 7686 is to strengthen manpower education and training in the Philippines by institutionalizing the Dual Training System as an instructional delivery system of technical and vocational education and training.
The Dual Training System is an instructional delivery system that combines in-plant training and in-school training based on a training plan collaboratively designed and implemented by an accredited dual system educational institution/training center and an accredited dual system agricultural, industrial, or business establishment.
Trainees are persons qualified to undergo the dual training system for the purpose of acquiring and developing job qualifications.
Participating establishments are allowed to deduct 50% of the actual expenses paid to accredited educational institutions for trainees from their taxable income, up to 5% of total direct labor expenses but not exceeding 25 million pesos annually. Donations for the operation of the system are deductible up to 3% of taxable business income, or fully deductible if included in National Priority Programs. They are also exempt from Donor's tax, with conditions on administrative expenses.
They must submit a letter of application, memorandum of agreement, accreditation of educational institution, affidavits/statements of amounts contributed and received, official receipts, financial statements, and registration documents like SEC/DTI certificates and articles of incorporation.
Essential equipment, apparatus, and materials imported by accredited dual training educational institutions are exempt from Value-Added Tax (VAT), ad valorem, and excise taxes.
They must file an application with the Department of Finance along with shipping documents, commercial invoice, TESDA accreditation and recommendation, affidavit of exclusive use for dual training, certificate of registration, certification from DTI that items are not locally available, and an affidavit that items will not be sold or disposed without approval.
The Department of Finance may conduct inspections before or after approval of any application for tax and duty incentives to ensure compliance with requirements.
No, nothing in the Act or these regulations shall diminish or reduce any privileges already enjoyed under existing laws, decrees, or executive orders.
They are deemed automatically appropriated and charged against the current year's contingency fund, with an initial appropriation of One Million Pesos for implementation, and thereafter such sums as necessary.