Tax Planning
How the Philippines’ EBET & Adopt-A-School Acts Incentives Are Changing Your Training Expense Deductions
New clarifications in the Philippines affect how training expenses under EBET & Adopt-A-School Acts can be treated for tax deductions — key for companies investing in workforce development.
By NomadicTax Research Team • 5-8 min read • September 7, 2026
## Background: Incentive Frameworks Defined
The **Enterprise-Based Education and Training (EBET) Act (RA 12063)** and the **Adopt-A-School Act (RA 8525)** offer enhanced tax incentives to private entities that collaborate with educational or technical-vocational institutions. These incentives include **additional deductions** for training expenses. ([bir-cdn.bir.gov.ph](https://bir-cdn.bir.gov.ph/BIR/pdf/RMC%20No.%2023-2026.pdf?utm_source=openai))
## Recent Clarifications (RMC No. 023-2026)
On **30 March 2026**, the Bureau of Internal Revenue issued **Revenue Memorandum Circular (RMC) No. 023-2026** to clarify RR No. 13-2025 about the procedures and definitions for availing incentives under EBET and Adopt-A-School. ([bir-cdn.bir.gov.ph](https://bir-cdn.bir.gov.ph/BIR/pdf/RMC%20No.%2023-2026.pdf?utm_source=openai))
### Key Clarifications Include:
- **“Technical-Vocational Institutions” (TVIs)** refers specifically to **enterprises registered with the Technical Education and Skills Development Authority (TESDA)** that implement EBET frameworks. Academic institutions outside TESDA registration are excluded. ([bir-cdn.bir.gov.ph](https://bir-cdn.bir.gov.ph/BIR/pdf/RMC%20No.%2023-2026.pdf?utm_source=openai))
- **Additional deduction rate:** Until **31 December 2027**, allowable deduction = **150% of actual training expense** (100% base + 50% extra). Starting **1 January 2028**, the additional deduction rate increases to **75% of actual expense**, subject to caps. ([bir-cdn.bir.gov.ph](https://bir-cdn.bir.gov.ph/BIR/pdf/RMC%20No.%2023-2026.pdf?utm_source=openai))
- **Limits:** Additional deduction cannot exceed **5% of total direct labor expenses** or **₱25 million/year**, whichever is lower. ([bir-cdn.bir.gov.ph](https://bir-cdn.bir.gov.ph/BIR/pdf/RMC%20No.%2023-2026.pdf?utm_source=openai))
## Actionable Planning Tips
1. Companies should ensure that training programs partner with **TESDA-registered TVIs**, and proper documentation is obtained.
2. From now until the end of 2027, examine whether current training expenses would hit the limits under 5% of direct labor costs, so budgeting for 2028 can anticipate adjustments.
3. Plan workforce training schedules to maximize deductions while staying within caps.
4. Ensure internal payroll systems track “direct labor expenses” cleanly to support claims.
## Example Comparison
Company A spends ₱50 million on direct labor annually and ₱5 million on eligible training through TESDA TVIs. Under the 150% rate, they get a deduction of ₱7.5 million (₱5 million × 1.5), which is **10% of direct labor expenses**—but since 5% limit is lower, they can only claim up to ₱2.5 million. Excellent planning needed.