How to Claim Corporate Tax Deductions Under the EBET Act: Why Upskilling Your Philippine Workforce is Now Highly Incentivized

Introduction: why EBET-linked tax deductions matter for employers

Philippine employers have long invested in workforce training, but tax rules historically treated many training costs as ordinary business expenses, without a special uplift. The Enterprise-Based Education and Training (EBET) Framework Act and the BIR’s implementing guidance now provide a clearer, incentive-driven mechanism that can materially reduce taxable income, provided the training program is properly registered and documented.

This article explains what deductions are available, who may claim them, what “registered EBET” requires, how to compute the additional deduction, and the common disallowance risks under the 2025–2026 issuances implementing the EBET incentives.

Governing legal materials (statute and tax issuances)

The corporate tax incentives for EBET are anchored on these primary authorities:

• Republic Act No. 12063 (2024), Enterprise-Based Education and Training (EBET) Framework Act, particularly the provision granting an additional deduction for training expenses and the rule on exclusivity with certain other incentives (Section 20).
• IRR of Republic Act No. 12063 (2025), which details implementation requirements, including the TESDA Certificate of EBET Implementation as a condition for deductibility.
• Revenue Regulations (RR) No. 13-2025 (2025), which consolidates and clarifies the tax incentives and documentation rules for EBET implementers, including the additional deduction and donation-related rules for EBET theoretical instruction partners.
• Revenue Memorandum Circular (RMC) No. 23-2026 (2026), which provides interpretive guidance on what counts as deductible training expense, provides computational examples, and clarifies non-deductible items in certain EBET modalities.

What incentive does the EBET Act grant to enterprises?

Under Republic Act No. 12063 (2024), an enterprise implementing a registered EBET Program may claim an additional deduction from taxable income equivalent to:

• 50% of actual training expenses from effectivity of the Act up to 31 December 2027; and
• 75% of actual training expenses beginning 1 January 2028.

The additional deduction is subject to a ceiling: it must not exceed 5% of total direct labor expenses or Php 25,000,000.00 per year, whichever is lower. The enterprise must secure TESDA certification for this purpose (Republic Act No. 12063, dated 2024; IRR of Republic Act No. 12063, dated 2025).

Who can claim the additional deduction?

The tax uplift is reserved for an enterprise implementing a registered EBET Program. In other words, eligibility is not based on a general claim that training occurred; it depends on registration and compliance with the EBET framework as implemented through TESDA, and on meeting BIR documentation requirements under RR No. 13-2025 (2025) and RMC No. 23-2026 (2026).

Threshold requirement: your EBET Program must be registered, and you must have TESDA certification

To deduct training expenses under the EBET incentive structure, the employer must treat TESDA documentation as a gating requirement. The implementing guidance requires a Certificate of EBET Implementation from TESDA as a prerequisite for deducting the training expenses under the EBET rules (IRR of Republic Act No. 12063, dated 2025).

Under the IRR, TESDA issues the Certificate upon submission of the enterprise’s sworn declaration and after review of approved registration documents and the enterprise’s EBET Program implementation records (IRR of Republic Act No. 12063, dated 2025).

What counts as “actual training expenses” for the additional deduction?

The EBET incentive is computed as an additional deduction based on actual training expenses. While the full list of allowable line items will depend on the EBET program design and what the IRR and BIR accept as training expense, BIR guidance highlights that certain training allowances may qualify when they are directly incurred under the EBET Program.

Special focus: treatment of training allowances, meals, and transport (and why it matters for upskilling)

RMC No. 23-2026 (2026) draws an important distinction between (a) training allowance that may qualify as training expense, versus (b) allowances given in an upskilling context that do not qualify as training expense under the EBET Act’s incentive rules.

Under RMC No. 23-2026 (2026):

• If the training allowance is directly incurred by the Enterprise under the EBET Program, it may be claimed as deductible training expense pursuant to the EBET incentive rules under RR No. 13-2025 (2025).
• For an Upskilling Program, if the enterprise provides transportation and meal allowances to trainee-employees, these may not be claimed as part of training expense under the EBET Act because the upskilling trainee is already entitled to full wages and benefits enjoyed by a regular employee (RMC No. 23-2026, dated 2026).

This distinction matters because upskilling is often delivered to existing employees. Employers should plan the program design and cost structure so that claimed “training expenses” fit within the BIR’s accepted categories for the relevant EBET modality.

How the “additional 50% (or 75%) deduction” works: a computation guide

The EBET incentive is an additional deduction on top of the ordinary deductibility of the expense under general tax principles, subject to the statutory cap. BIR guidance provides an example computation for training allowance.

Example (based on BIR guidance): If an apprentice receives a Php 483.75 training allowance that is directly incurred under the EBET Program, the enterprise may claim Php 725.625 as the deductible training expense amount for the EBET additional deduction computation (i.e., Php 483.75 × 150%), reflecting the 50% additional deduction regime applicable until 31 December 2027 (RMC No. 23-2026, dated 2026; RR No. 13-2025, dated 2025).

To avoid disallowance, apply the statutory ceiling in a separate step:

• Compute the additional deduction base: total “actual training expenses” that qualify under the registered EBET Program.
• Compute the uplift: 50% (until 31 December 2027) or 75% (starting 1 January 2028) of qualifying actual training expenses.
• Apply the cap: the additional deduction cannot exceed 5% of total direct labor expenses or Php 25,000,000 per year, whichever is lower (Republic Act No. 12063, dated 2024).

Annual timing rule: no carry-over if you fail to claim within the taxable year

RMC No. 23-2026 (2026) states that deductions must be availed of in the taxable year when the expenses have been paid or incurred, and unclaimed EBET incentives are forfeited and cannot be carried over to later taxable periods.

Implication: if your internal finance team waits for “completion of the program” or “next year’s audit” before claiming, you may lose the incentive. Align program execution, documentation, and tax reporting within the same taxable year where the costs are incurred.

Interaction with other incentive systems: election and exclusivity rules

Republic Act No. 12063 (2024) provides that an enterprise registered with an investment promotion agency (IPA) and implementing an EBET Program may opt to avail of incentives either under the EBET Act or under the applicable fiscal incentives under Title XIII of the National Internal Revenue Code, as amended, but not both simultaneously for the same incentive set. Availment under Title XIII precludes simultaneous availment of fiscal incentives under the EBET Act (Republic Act No. 12063, dated 2024).

Separately, CTA En Banc No. 1918, Commissioner of Internal Revenue v. Philippine International Air Terminals Co., Inc. (2020), while not an EBET case, illustrates how Philippine tax incentive regimes often operate on an “in lieu of all taxes” or “no simultaneous availment” logic within a particular registration framework, with enforceable conditions and elections reflected in implementing rules and registration agreements. This is consistent with the EBET Act’s explicit election and exclusivity rule for IPA-registered enterprises.

Documentation checklist: what to prepare before you claim

While the exact set of attachments may vary depending on EBET modality and TESDA/BIR updates, the current issuances emphasize documentary readiness. At a minimum, enterprises should maintain the following:

• TESDA Certificate of EBET Implementation (IRR of Republic Act No. 12063, dated 2025).
• Proof that the EBET Program is registered and implemented as approved (program documents and implementation records) (IRR of Republic Act No. 12063, dated 2025).
• Books, invoices, payroll records, and disbursement evidence supporting that the claimed amounts are actual training expenses and were paid or incurred within the taxable year (RMC No. 23-2026, dated 2026).
• A computation worksheet showing: qualifying expenses, the additional 50% (or 75%) uplift, and application of the 5% direct labor or Php 25M cap (Republic Act No. 12063, dated 2024).

Typical scenarios and how the rules apply

Scenario 1: Apprenticeship allowance under a registered EBET Program. If the apprenticeship is under a registered EBET Program and the allowance is directly incurred by the enterprise for that EBET Program, it may qualify as training expense for purposes of the additional deduction, subject to the statutory cap and documentation (RR No. 13-2025, dated 2025; RMC No. 23-2026, dated 2026; Republic Act No. 12063, dated 2024).

Scenario 2: Upskilling existing employees; meals and transport provided. If the upskilling trainees are existing employees entitled to full wages and benefits, transportation and meal allowances granted to them are not treated as deductible training expense under the EBET Act, per BIR guidance (RMC No. 23-2026, dated 2026).

Scenario 3: Company is IPA-registered and already enjoys fiscal incentives. If the enterprise is IPA-registered, it must consider the EBET Act’s election rule and avoid claiming EBET fiscal incentives simultaneously with Title XIII fiscal incentives where precluded. The decision point should be documented and consistent with tax filings and incentive registrations (Republic Act No. 12063, dated 2024).

Summary table: eligibility, benefit, caps, and common disallowance points

Item	Rule	Where stated
Who qualifies	Enterprise implementing a registered EBET Program	Republic Act No. 12063 (2024); RR No. 13-2025 (2025)
Benefit	Additional deduction: 50% of actual training expenses (until 31 Dec 2027); 75% starting 1 Jan 2028	Republic Act No. 12063 (2024)
Cap	Not over 5% of total direct labor or Php 25,000,000/year, whichever is lower	Republic Act No. 12063 (2024)
TESDA document	Certificate of EBET Implementation is a prerequisite to deductibility	IRR of Republic Act No. 12063 (2025)
No carry-over	Must be claimed in the year paid/incurred; otherwise forfeited	RMC No. 23-2026 (2026)
Upskilling limitation	Meals/transport allowances to trainee-employees in upskilling are not part of training expense under EBET	RMC No. 23-2026 (2026)
Exclusivity with other incentives	IPA-registered enterprise may choose EBET incentives or Title XIII incentives; no simultaneous availment where barred	Republic Act No. 12063 (2024)

Compliance reminders for corporate taxpayers

• Register first, claim later. The strongest technical position starts with a registered EBET Program and a TESDA Certificate of EBET Implementation (IRR of Republic Act No. 12063, dated 2025).
• Do not assume all “employee development” costs qualify. Classify expenses by EBET modality and follow the BIR’s interpretive limits for upskilling-related allowances (RMC No. 23-2026, dated 2026).
• Track the cap throughout the year. The 5% of direct labor/Php 25M ceiling can bind quickly for labor-intensive enterprises (Republic Act No. 12063, dated 2024).
• Claim within the same taxable year. Unclaimed deductions cannot be carried over (RMC No. 23-2026, dated 2026).

Conclusion: final observations for employers planning EBET upskilling programs

The EBET Act and its tax implementing issuances make workforce development more tax-efficient, but the incentive is documentation-driven: registered EBET Program, TESDA certification, correct expense classification, and timely claiming. For upskilling in particular, employers should align program design with what the BIR recognizes as training expenses and avoid claiming items that the BIR has expressly excluded for upskilling trainees who already receive full wages and benefits.

Employers intending to maximize the EBET deduction should coordinate HR, finance, and compliance teams early in the training cycle, confirm TESDA registration and certification steps, and build an audit-ready file that ties the training plan to the claimed amounts and statutory caps.

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