Gov’t offers tax break to schools, firms with dual training system

MANILA, Philippines - Schools and firms nationwide can enjoy tax break if they would agree to offer technical vocational education training, the Technical Education and Skills Development Authority (TESDA) announced this week.

TESDA chief Joel Villanueva said they are offering tax incentives to encourage greater private sector participation in the Dual Training System (DTS) that gives the trainees the hands-on experience in the workplace.

“We would like the TVET students to gain actual workplace experience and at the same time help employers in the skills development of their prospective workers,” Villanueva explained.

Villanueva said establishments that have been accredited by TESDA to participate in the DTS may avail of 50 percent deduction from their taxable income of the actual system expenses paid to the Accredited Dual Training System Educational Institution for the establishment’s trainees, provided that such expenses shall not exceed five percent of their total direct labor expenses.

Government, Villanueva said, also offers tax break for donation, contribution, bequest, subsidy, or financial aid actually paid or made for the operation of the system within the taxable year.

Considering that the Dual Training System Educational Program is included in the list of National Priority Programs (NPP), Villanueva said corporate contributions to the System shall be deductible in full from its taxable business income for the taxable period when actually made.

Students’ education and training, Villanueva said, requires 60 percent actual work exposure and only 40 percent in school.

Under Republic Act 7686, the DTS brings together establishments and the educational institutions to share the responsibility of providing the students with the best possible job qualifications, the former essentially through practical training and the latter by securing an adequate level of specific, general and occupation-related theoretical instruction.

TESDA already came out with guidelines on the tax incentives for participating schools and firms in the DTS.

“One of our main focus is the industries’ involvement in the DTS to help trainees immediately find employment after completing the program,” Villanueva said.

He said actual work exposure guarantee that TESDA could produce graduates that the companies need, thereby helping ease the job mismatch.

As of December last year, about 500 institutions and establishments have been actively participating in the DTS. The biggest number of these are from the National Capital Region, Region IV-A, VII and XII.