SENIOR CITIZENS Illustration:

SENIOR CITIZEN LAW Assume a taxpayer employs both regular and senior citizen
employees and paid the following compensation during the
Republic Act (RA) No. 7432 – April 23, 1992 year.
 An Act To Maximize the Contribution of Senior Regular employees P200, 000
Citizens to Nation Building, Grant Benefits and
Special Privileges and for Other Purposes Senior citizen employees with salary grades

RA No. 9257 – July 22, 2003 above poverty level 50,000

 Expanded Senior Citizens Act of 2003 Senior citizen employees with salary grades

RA No. 9994 – February 15, 2010 below poverty level 40, 000

 Expanded Senior Citizens Act of 2010 Total compensation expense P290, 000

WHO ARE THE SENIOR CITIZENS Additional: 40,000 x 15% = 6,000; Total deductible
compensation = 296,000
Senior Citizen or Elderly refers to any resident Filipino citizen
aged 60 years old and above. VALUE-ADDED TAX (VAT)

It may apply to senior citizens with dual citizenship status A senior citizen is exempt from VAT on some of his purchases
provided they prove their Filipino citizenship and have at least as enumerated under RR 7-2010.
6 months residency in the Philippines.
The sellers are precluded from billing the VAT to the senior
INCOME TAX OF SENIOR CITIZENS citizen in order to ensure full entitlement to such exemption.

They are subject to income tax on income earned from the The input VAT attributable to sales made to senior citizens,
practice of profession, for doing business and/or on their exempt as such, are to be treated as deductible expenses and
compensation income like everybody else. not as input tax credits.

They are likewise subject to Final Taxes on passive income 3% OTHER PERCENTAGE TAX
and Capital Gains Tax on capital gains, Donor’s tax, Estate
Tax, Excise Tax and DST. Considering that under the TRAIN, sale or lease of goods and
services to senior citizens under RA 9994 is already
They remain to be covered by the exemptions granted to other considered a VAT-exempt transaction under Section 109 (W),
individuals such as – it should likewise be considered exempt from the 3% OPT.

1. If qualifies ad MWE The same is true as regards qualified purchases on PWDs.

2. If the gross income does not exceed personal Still, no equivalent issuance was issued by the BIR to effect
exemptions (basic and additional) such exemption.

TRAIN: No more personal and additional exemptions DISCOUNT PRIVILEGES

but the first 250,000 per graduated table is exempt
Under Section 4 of RR No. 7-2010, all establishments,
ADDITIONAL CLAIMABLE COMPENSATION EXPENSE supplying any of the following goods and services as specified
FOR SENOIR CITIZEN EMPLOYEES under the Senior Citizens Act, for their exclusive use and
enjoyment or availment, shall give a discount of 20%:
Private establishments employing Senior Citizens shall be
entitled to additional deduction from gross income equivalent a) Medicines
to 15% of the total amount paid as salaries and wages to senior b) On the professional fees of attending physicians
citizens. c) On professional fees of licensed professional health
workers
Conditions for deductibility of additional compensation: d) On medical and dental services xxx
 Employment shall have to continue for at least 6 e) In actual fare for land transportation travel
months f) On actual transportation fare for domestic air
 The annual taxable income of the senior citizen does transport services and sea shipping vessels
not exceed the poverty level as determined by the g) On the utilization of services in hotels and similar
NEDA. For this purpose, the Senior Citizen shall lodging establishments, restaurants and recreation
submit to his employer a sworn certification that his centers
annual taxable does not exceed the poverty level. h) On admission fees charged by theaters xxx
 i) On funeral and burial services for the death of Senior TAX TREATMENT OF DISCOUNTS GRANTED TO
Citizens SENIOR CITIZENS

Illustration: GROSS SALES

ABC, a senior citizen, together with his son XYZ and the (DISCOUNTS AND RETURNS)
latter’s wife and 2 children went to a restaurant to dine.
(COST OF GOODS SOLD)
How much will be the senior citizen discount if
GROSS INCOME
(A) the orders are individualized, where each meal costs 200,
exclusive of VAT (OPERATING EXPENSES)

(B) the orders are NOT individualized, the total bills is 1,120 (TAX DEDUCTION FOR SENIOR CITIZEN DISCOUNTS)

TAXABLE INCOME

(A) the orders are individualized, where each meal costs 200, TAX TATE
exclusive of VAT 200 x 20% = 40 SUBJECT TO THE FOLLOWING RULES
(B) the orders are NOT individualized, the total bills is 1,120 1. Portion of Gross Sales exclusively used, consumed or
1,120 / 1.12 = 1,000 (since Senior Citizens are exempt from enjoyed by the Senior Citizen.
VAT) 2. The gross selling price and sales discount must be
separately indicated.
1,000 / 5 = 200 (for the exclusive use and enjoyment /
3. Only the actual amount of discount granted or sales
availment of the Senior Citizen)
discount not less that the statutory rates, whichever is
higher.
4. The seller must record its sales inclusive of the
Illustration: discount granted.
Goodhealth Drugstore Inc. recorded a P1,200,000 total 5. The discount can only be allowed as a deduction
deductible expense and the following sales: from gross income for the same taxable year that the
discount is granted
Regular Senior Citizen 6. The business establishment is required to keep a
Customers Customers separate and accurate record of sales
Gross Sales 5,000,000 1,200,000
7. Only business establishments selling any of the
Cost of Sales 3,000,000 800,000
qualified goods and services to Senior Citizens where
an actual discount was granted may claim the
Goodhealth adopts a policy of giving senior citizen a 25% deduction
discount. Consequently, it granted P300,00 total senior 8. The seller must not claim the Optional Standard
citizens’ discounts during the period. Deduction during the taxable year.
SPECIAL DISCOUNTS PENALTIES FOR NON-COMPLIANCE
The monthly utilization of water and electricity by the Senior Aside from the penalties provided under the Tax Code, any
Citizen supplied by public utilities will be subject to a five person who violates the provision of RR 7-2010 shall suffer:
percent (5%) discount upon concurrence of the following:
1st Violation – Fine – 50,000 to 100,000; Imprisonment – 2 to
1. The individual meters for the said utilities are 6 years; or both
registered in the name of the Senior Citizen residing
therein; Subsequent Violation – Fine – 100,000 to 200,000;
Imprisonment – 2 to 6 years; or both
2. The monthly consumption does not exceed 100kwh
of electricity and 30 m3 of water
3. The privilege is granted per household regardless of
the number of Senior Citizens residing therein
 Department of Health as to his disability, skills, and
qualifications.
PERSONS WITH DISABILITIES
INCOME TAX – For construction of physical facilities
LAWS RELATIVE TO PERSONS WITH DISABILITIES
Private entities that improve or modify their physical facilities
Batas Pambansa Blg. 344 – February 25, 1983 in order to provide reasonable accommodation for disabled
 Required certain buildings, institutions, to install persons shall also be entitled to an additional deduction from
facilities and other devices to enhance the mobility of their income equivalent to fifty percent (50%) of the direct
disabled persons costs of the improvements or modifications except those
improvements or modifications required under BP Blg. 344
RA No. 7277 – March 24, 1992 (e.g., sidewalks, ramps and railings).
 Magna Carta for Persons with Disability and For VALUE-ADDED TAX
Other Purposes
Similar to senior citizens, PWDs are entitled to a 20%
RA No. 9442 – April 30, 2007 discount and VAT exemption on the purchase of certain goods
and services from all establishments for their exclusive use,
 Magna Carta for Persons with Disability and For
enjoyment or availment.
Other Purposes [Discount and Additional Deduction]
The input VAT attributable to sales made to PWDs, exempt as
RA No. 10754 – March 23, 2016
such, are to be treated as deductible expenses and not as tax
 Magna Carta for Persons with Disability and For credits, similar to senior citizens.
Other Purposes [VAT exemption]
DISCOUNT PRIVILEDGES
WHO ARE PWDs
1. Lodging establishments
Persons with Disabilities (PWD) are those who have long term 2. Restaurants
physical, mental, intellectual or sensory impairments which in 3. Recreation Centers
interaction with various barriers may hinder their full and 4. Purchase of Medicines and Foods for Special
effective participation in society on an equal basis with others.
Medicinal Purposes
INCOME TAX 5. Medical and Dental Services, Diagnostic and
Laboratory Fees and Professional Fees for Attending
Similar to Senior Citizens, they are subject to income tax on Doctors
income earned from the practice of profession, for doing
6. Domestic Air and Sea Travel
business and/or on their compensation income like everybody
else.
7. Land Transportation Travel
8. Funeral and Burial Services for the Death of a PWD
They are likewise subject to Final Taxes on passive income
and Capital Gains Tax on capital gains, Donor’s tax, Estate TAX TREATMENT OF DISCOUNTS GRANTED TO
Tax, Excise Tax and DST. PWDs

Additional Exemption for Benefactors – Because of TRAIN The establishment may claim the discounts provided herein as
LAW this is not applicable anymore. tax deductions [treated as ordinary and necessary expenses]
based on the net cost of the goods sold or services rendered,
INCOME TAX – For employers subject to the following conditions:
Private entities that employ disabled persons who meet the 1. The discount can only be allowed as a deduction
required skills or qualifications, either as regular employees, from gross income for the same taxable year that the
apprentices or learners, shall be entitled to an additional discount is granted.
deduction, from their gross income, equivalent to twenty-five
2. The total amount of the claimed tax deduction net of
percent (25%) of the amount paid as salaries and wages
VAT, if applicable, shall be included in their gross
disabled persons.
sales receipts for tax purposes.
Requisites for deductibility: 3. The same should be subject to proper
documentations; the discount must be separately
 The entity present proof as certified by the indicated.
Department of Labor and Employment that disabled
4. The records of sales of the establishments must
persons are under their employ.
contain the PWD identification card number and TIN.
 The disabled employee is accredited with the
Department of Labor and Employment and the
5. The seller must not claim the Optional Standard
Deduction during the taxable year.
VAT-Registered Entity

Non-VAT-Registered Entity

SC and PWD

No Double Discounts for SC and PWD.

PENALTIES FOR NONCOMPLIANCE

1st Violation – Fine – 50,000 to 100,000; Imprisonment – 6

months to 2 years; or both

Subsequent Violation – Fine – 100,000 to 200,000;

Imprisonment – 2 to 6 years; or both
BARANGAY MICRO-BUSINESS ENTERPRISE (BMBE) 6. Merger or consolidation with an entity which is not
eligible to be a BMBE
WHAT IS BMBE?
7. Sale or transfer of the BMBE, if a sole proprietorship
A BMBE is a business entity or enterprise engaged in the without prejudice to the transferee applying for
production, processing or manufacturing of products or registration
commodities, including agro-processing, trading and services, 8. Submission of fake or falsified documents
whose total assets including those arising from loans but 9. Retirement from business, or cessation/suspension of
exclusive of the land on which the particular business entity’s operations for one year
office, plant, and equipment are situated, do not exceed
10. Making false or omitting required declarations or
P3,000, 000.
statements
The assets must be owned and used for the conduct of its
INCENTIVES
business as such BMBE.
INCOME TAX
NOT INCLUDED
The BMBE is exempt from income tax on its income derived
The term service excludes those rendered by licensed
from operations Availment of the Tax Incentive – the BMBE
professionals and partnership and corporations engaged in
shall register as such BMBE with the BIR RDO where the
consultancy, advisory and similar services which are
principal office or place of business of the BMBE is located.
essentially carried out through licensed professionals.
Exemptions not covered –
An enterprise must not be a branch or a subsidiary of a large-
scale enterprise and its policies, and modus operandi must not  Final Withholding Tax (FWT) on Passive Income and
be determined by a large-scale enterprise such as in the case of Capital Gains Tax on Capital Gains
franchises.  Business Taxes
 Annual Registration Fee
VALUATION OF ASSETS
 Withholding Tax
Cash
ANNUAL INFORMATION RETURN
 Peso – shall be valued at actual currency
While a BMBE is exempt from Income Tax, it is nevertheless
 Foreign Currency – shall be valued at the official
required to file an Annual Information Return, together with
exchange rate as prescribed by the BSP
an Account Information Form, or its equivalent, containing
Other Assets - shall be generally valued at acquisition or data lifted from audited financial statements and a sworn
historical cost, net of a reasonable amount for depreciation. statement of assets owned and/or used in business.

Real Property – shall be valued at acquisition cost, net of The deadline for filing the same is the 15th day of the fourth
depreciation. month following the close of the taxable year, similar to an
Annual Income Tax Return.
CERTIFICATE OF AUTHORITY

To avail of the benefits and privileges of a BMBE, an

applicant must secure a certificate of authority to operate as a
BMBE from the Office of the Treasurer of the city or
municipality that has jurisdiction.

The Certificate of Authority shall be effective for a period of 2

years and renewable for a period of 2 years for every renewal.

REVOCATION OF BMBE TAX EXEMPTIONS

The income tax exemption of a BMBE may be revoked for

any of the following reasons:

1. Transfer of place of business

2. Value of total assets exceeds P3, 000, 000
3. Voluntary surrender of the Certificate of Authority
4. Death of the registered individual owner;
5. Violation or non-compliance with the provisions of
RA 9178