Introduction

The Philippines faces a two-pronged conundrum on both environmental and industrial fronts. According to the International Labor Organization, the country is one of the most vulnerable to climate risks and continues to face employment challenges amid rapid economic growth.

The effect of climate change on employment and working conditions is not difficult to imagine. Extreme weather conditions put many jobs in jeopardy, and global warming significantly affects worker productivity. Across numerous sectors, including agriculture and tourism in countries like the Philippines that are more vulnerable to climate risks, job losses are anticipated in the future. The health and safety of workers who primarily perform outdoor labour, including those in the construction industry, will also be significantly impacted by the numerous extreme weather events.

Green Jobs Act

In 2016, the Green Jobs Act, a pioneering piece of legislation centring on creating decent work while being responsive to climate needs, was passed into law in the Philippines. The law calls for a whole-of-government approach to promoting sustainable growth, creating decent jobs and building resilience against climate change through incentives to businesses generating green jobs.

"Green jobs" is defined under the Act as "employment that contributes to preserving or restoring the quality of the environment", which must also be "decent jobs that are productive, respect the rights of workers, deliver a fair income, provide security in the workplace and social protection for families, and promote social dialogue".1 These jobs are central to sustainable development and respond to the global challenges of environmental protection, economic development and social inclusion.

More importantly, the Green Jobs Act recognises green jobs as an important tool in preserving the environment by providing specific financial incentives2 for green job creation, including:

  • tax deductions, equivalent to 50% of the total cost, for skills training and research and development for green jobs;3 and
  • tax-free imports of capital equipment that would be used directly and exclusively to promote green jobs.4

Revenue Regulation No. 5-2019

In conjunction, the Philippines' Bureau of Internal Revenue issued Revenue Regulation No. 5-2019 to clarify the coverage and tax perks of qualified business enterprises that provide green jobs.

In order to attain the status of "qualified", a business enterprise must first be certified by the secretary of the Climate Change Commission as qualified and eligible to receive the tax incentive.5 To qualify, establishments – including self-employed or own-account workers, micro, small and medium enterprises, and community-based enterprises – must be engaged in producing, manufacturing, processing, repacking, assembling or selling goods and/or services.6

Qualified business enterprises will be entitled to an additional deduction from the taxable income equivalent to 50% of their total skills training and research expenses, subject to the conditions that:7

  • the deduction will be availed of in the taxable year when the expenses were paid or incurred; and
  • the taxpayer can substantiate the amount and direct connection of expense claimed as deduction with sufficient evidence (eg, official receipts, delivery receipts and other records).

Comment

It is important to remember that, despite these incentives, it is impracticable to expect companies to solely carry the moral burden of addressing climate vulnerabilities, especially in the absence of external drivers.

Working with business enterprises, the government is expected to issue and enforce regulations requiring companies to reduce their carbon emissions and take an active role in creating jobs that help minimise climate change impacts.

The reality is that no one actor can prevent or even just mitigate the impacts of climate change. The action call cuts across all sectors, and the incentivised creation of green jobs for business enterprises is just one of the many avenues through which the Philippines' environmental conundrum can be addressed.

Footnotes

1. Rep Act No. 10771, sec 4(c).

2. Id, sec 5.

3. Id, sec 5(a).

4. Id, sec 5(b).

5. Revenue Regulations No. 5-2019, sec 3.

6. Id, sec 2(a).

7. Id, sec 4.

Originally published at Lexology by the International Law Office (7 June 2023)

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