Revenue Memorandum Circular · RMCTax credits / incentives

RMC No. 28-2023

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Document type: RMC
Number: 28
Year: 2023
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REVENUE MEMORANDUM CIRCULAR NO. 28-2023 issued on March 3, 2023 circularizes Republic Act (RA) No. 11898 (Extended Producer Responsibility Act of 2022) and its Implementing Rules and Regulations. Any provision of law to the contrary notwithstanding, Obliged Enterprises or Producer Responsibility Organizations acting on their behalf, and other registered business enterprises may apply for incentives following the approval process provided under Title XIII (Tax Incentives) of the National Internal Revenue Code (NIRC) of 1997, as amended, for eligible activities: Provided, That such activities shall undergo the standard processes in the identification of qualified activities under the Strategic Investment Priority Plan. The Extended Producer Responsibility expenses of Obliged Enterprises, PROs, and private enterprises shall be considered as necessary expenses deductible from gross income subject to the substantiation requirements for necessary business expenses deductible from gross annual income in accordance with Section 34(A)(I) of the NIRC of 1997, as amended. All legacies, gifts and donations to Local Government Units, enterprises or private entities, including Non-Governmental Organizations, for the support and maintenance of the program for socially acceptable, effective and efficient solid waste management shall be exempt from all internal revenue taxes and customs duties, and shall be deductible in full from the gross income of the donor for Income Tax purposes. The standard procedures for such exemptions are contained in the Tariff and Customs Code, Section 105-106.

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Structured from the available issuance text · Tax credits / incentives

RMC No. 28-2023 (March 3, 2023) circularizes Republic Act No. 11898, the Extended Producer Responsibility (EPR) Act of 2022, and its Implementing Rules and Regulations. It states that Obliged Enterprises, Producer Responsibility Organizations (PROs) acting on their behalf, and other registered business enterprises may apply for incentives under Title XIII (Tax Incentives) of the NIRC of 1997, as amended, for eligible activities vetted through the standard processes under the Strategic Investment Priority Plan. EPR expenses of Obliged Enterprises, PROs, and private enterprises are treated as necessary expenses deductible from gross income, subject to the substantiation requirements of Section 34(A)(I) of the NIRC. Finally, legacies, gifts, and donations to LGUs, enterprises, or private entities (including NGOs) supporting socially acceptable, effective, and efficient solid waste management are exempt from all internal revenue taxes and customs duties and are deductible in full from the donor's gross income for income tax purposes, with standard exemption procedures found in Sections 105-106 of the Tariff and Customs Code.

Purpose

To circularize Republic Act No. 11898 (Extended Producer Responsibility Act of 2022) and its Implementing Rules and Regulations, including the tax incentives, expense deductibility, and donation tax exemption/deductibility provisions under the law.

In brief

Circularizes RA 11898 (Extended Producer Responsibility Act of 2022) and its IRR, covering tax incentives for eligible EPR activities, deductibility of EPR expenses from gross income, and full income-tax deductibility and tax/duty exemption of donations supporting solid waste management.

Keywords

Extended Producer Responsibility (EPR)RA 11898Obliged EnterprisesProducer Responsibility Organizations (PROs)Deductible expensesSection 34(A)(I) NIRCStrategic Investment Priority PlanTax incentivesDonation tax exemptionSolid waste managementSubstantiation requirements

Key points

RMC No. 28-2023 circularizes Republic Act No. 11898 (Extended Producer Responsibility Act of 2022) and its Implementing Rules and Regulations.
Obliged Enterprises, Producer Responsibility Organizations acting on their behalf, and other registered business enterprises may apply for incentives for eligible activities under the Title XIII (Tax Incentives) approval process of the NIRC of 1997, as amended.
Eligible incentive activities must undergo the standard processes for identification of qualified activities under the Strategic Investment Priority Plan.
EPR expenses of Obliged Enterprises, PROs, and private enterprises are considered necessary expenses deductible from gross income, subject to substantiation requirements under Section 34(A)(I) of the NIRC of 1997, as amended.
Legacies, gifts, and donations to LGUs, enterprises, or private entities, including NGOs, supporting socially acceptable, effective, and efficient solid waste management programs are exempt from all internal revenue taxes and customs duties.
Such legacies, gifts, and donations are deductible in full from the donor's gross income for income tax purposes, with standard exemption procedures contained in Sections 105-106 of the Tariff and Customs Code.

Tax types

Income tax - EPR expenses are deductible from gross income, and qualifying donations are deductible in full from the donor's gross income for income tax purposes.
Internal revenue taxes (generally) - qualifying legacies, gifts, and donations for solid waste management programs are exempt from all internal revenue taxes.
Customs duties - qualifying legacies, gifts, and donations for solid waste management programs are also exempt from customs duties.

Affected taxpayers

Obliged Enterprises under the Extended Producer Responsibility framework, which may claim deductibility of EPR expenses and apply for incentives.
Producer Responsibility Organizations (PROs) acting on behalf of Obliged Enterprises, which may apply for incentives and deduct EPR expenses.
Other registered business enterprises and private enterprises with eligible EPR-related activities or EPR expenses.
Donors making legacies, gifts, or donations to LGUs, enterprises, private entities, or NGOs for solid waste management programs, who enjoy tax/duty exemption on the donation and full deductibility from gross income.