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Republic of the Philippines
House of Representatines
Queson Gity, Mote Mavilx

EIGHTEENTH CONGRESS
Second Regular Session

House Bill No. 7120

INTRODUCED BY
REP. ALFRED VARGAS

AN ACT
GRANTING TAX INCENTIVES TO PRIVATE EMPLOYERS THAT HIRE K
TO 12 GRADUATES, APPROPRIATING FUNDS THEREFOR,
AND FOR OTHER PURPOSES

EXPLANATORY NOTE

The State puts a premium on both education and the labor sector. The
role of education is to foster patriotism and nationalism, accelerate social
progress, and promote total human liberation and development. This is a
mandate of the State under Section 17 of the 1987 Constitution. It is the
duty of the State to create and impose policies that would improve
employment and fight poverty in order to "ensure the prosperity and
independence of the nation."

The intrinsic link between education and employment requires the
simultaneous development of both. The Enhanced Basic Education Act of
2013, adding two years to the basic education in the country, aims to
provide graduates that are eligible and prepared for employment or
engagement in entrepreneurial activities with qualification standards worthy
locally and internationally.

Recent surveys however show that employers still have reservations in
hiring K-12 graduates.! The Philippine Institute of Development Studies
(PIDS) explains that companies do not have in-depth knowledge on the
senior high school program and the knowledge and skills acquired by the K-

"Philippine Star. “Companies still hesitant to hire K-12 graduates” September 30, 2019.
huips://www.philstar, com/business/business-as-usual/2019/09/30/1955967/companies-st
graduates (Accessed 12 July 2020)



12 graduates. This is coupled with the fear and lack of confidence by senior
high school students of not being able to get a job immediately after
graduation despite the goals set by the K-12 program.?

To address this problem, this bill shall provide tax incentives to
employers who hire graduates under the K-12 program. This would ensure
that the goals of Republic Act No. 10533 are actually achieved. More
importantly, this would increase the chances of entering the workforce and
the employment opportunities for K-12 Graduates.

In view of the foregoing, the immediate passage of this bill is earnestly

sought.
ALFRED 1g

? Philippine Institute of Development Studies. 2018. “Senior High School and the Labor Market”


Republic of the Philippines
Aouse of Representatives
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
Second Regular Session

House Bill No. 7120

INTRODUCED BY
REP. ALFRED VARGAS

AN ACT
GRANTING TAX INCENTIVES TO PRIVATE EMPLOYERS THAT HIRE K
TO 12 GRADUATES, APPROPRIATING FUNDS THEREFOR,
AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Short Title. — The Act shall be known as the “K-12 Employers’
Tax Incentives Act”.

SECTION 2. Declaration of State Policy. - The State shall bridge the gap
between the education and labor sectors by creating and maintaining
systems that would ensure that graduates would be able to enter and be
productive member of the country’s workforce. Under Section 18 of the 1987
Constitution, the State recognizes the role of labor as a primary social
economic force. In line with this, Section 3 of Article XIII expressly provides
that it is the role of the State to promote full employment and equality of
employment opportunities for all.

SECTION 3. Definition of Terms. - For purposes of this Act, these terms
are defined as follows:

(a) ‘Private employers’ refer to entities run by private individuals and
groups which may be an enterprise for profit or non-profit.

(b) ‘K-12 graduates’ refer to students who graduated under the K-12
program from a duly accredited institution by the Department of
Education. The K-12 graduate must be hired under a valid


employment contract and receives a salary or wage subject to income
tax.

SECTION 4. Deductions from Taxable Income. - As an incentive to
private employers, whether corporate or otherwise, who hire and employ K-
12 graduates shall be granted a special deduction from the computation of
their gross income, equivalent to 20% of the total amount paid as salaries
and wages to the aforementioned graduates, subject to Section 4 of the
National Internal Revenue Code. The tax deductions shall not exceed 10% of
the employer’s taxable income.

SECTION 5. Submission of Proof. - To be qualified for the tax deduction,
the private entity must present documents that the corresponding K-12
graduate/s are under their employ as well as proof of graduation from the
K-12 program.

SECTION 6. Repealing Clause. - All laws, decrees, orders, rules and
regulations, or other issuances or parts thereof inconsistent with the
provisions of this Act are hereby repealed or modified accordingly.

SECTION 7. Separability Clause. - If any portion or provision of this Act is
declared unconstitutional, the remainder of this Act or any provision not
affected thereby shall remain in force and effect.

SECTION 8. Effectivity. - This Act shall take effect fifteen (15) days after its
publication either in the Official Gazette or in a newspaper of general

circulation in the Philippines.

Approved,