BIR Issues Policies and Guidelines for the Availment of Incentives under the Free Legal Assistance Act

On 13 September 2022, the Bureau of Internal Revenue (“BIR”) Revenue Regulations No. 12-2022 (“RR 12-2022”) to provide more definitive guidelines, procedures, and requirements for the proper availment of the incentives under Republic Act No. 9999 or the Free Legal Assistance Act of 2010.

Under RR 12-2022, lawyers or professional partnerships rendering actual Free Legal Services shall be entitled to an allowable deduction from gross income equivalent to the lower of:

1. The amount that could have been collected for the actual free Legal Services rendered; or
2. 10% of the gross income derived from the actual performance of the legal profession.

The actual Free Legal Services shall be exclusive of the minimum 60-hour mandatory legal aid services rendered to indigent litigants.

Legal Services is any activity which requires the application of law, legal procedure, knowledge, training, and experience. For the purpose of availing incentives, the Legal Services must be within the services as defined by the Supreme Court in Bar Matter No. 2012 and subsequent issuances. Meanwhile, Free Legal Service shall refer to the appearance in court or quasi-judicial body for an indigent or pauper litigant and the preparation of pleadings or motions, as well as assistance by a practicing lawyer to indigent poor litigants in court-annexed mediation and other modes of alternative dispute resolution. 

To avail of the incentives, lawyers or professional partnerships shall attach to their income tax return for the period when the deduction is claimed, the following documents:

1. Certification from the Public Attorney’s Office, the Department of Justice or accredited association of the Supreme Court indicating that: (i) legal services to be provided are within the services defined by the Supreme Court, (ii) the agencies cannot provide the legal services to be provided by the private counsel, and (iii) the legal services were actually undertaken;
2. Accomplished BIR Form No. 1701 (for individual lawyers) or BIR Form No. 1702-EX (for general professional partnership); and
3. Sworn Statement of the Lawyer or managing partner (in case of professional partnership) as to the amount that could have been collected for the actual free legal service.