Implementing PWD tax privileges
The Bureau of Internal Revenue (BIR) recently issued Revenue Regulation (RR) No. 5-2017 implementing the tax privileges of persons with disability (PWDs) under the “Magna Carta for PWDs” and RA No. 10754, or “An Act Expanding the Benefits and Privileges of PWDs”.
Under the RR, qualified PWDs can claim VAT exemption and at least 20 percent discount from the following establishments on sale of goods and services for the exclusive use/enjoyment of the PWD:
Hotels, restaurants and other recreational centers;
Theaters, carnivals and other similar places of culture, leisure and amusement;
Drugstores for the purchase of generic and branded medicine;
Medical and dental services and professional fees of attending doctors;
Domestic air, sea and land transportation fares based on actual fare; and
Funeral and burial services (for beneficiaries of PWDs).
It is important to note that the above enumeration is exclusive. All other goods and services sold by the foregoing establishments not expressly included will not be considered for the 20 percent discount privilege.
The 20 percent discount will be deducted from the amount net of the 12 percent VAT. For percentage taxpayers, the amount of sales discounts will be excluded in computing the three percent percentage tax but will be included as part of gross sales/receipts for income tax purposes.
Establishments that grant sales discounts to PWDs will be entitled to deduct such discounts from their gross income for the same taxable year the discount is granted.
Availment of double discounts by PWDs is not allowed as when a PWD who is also a senior citizen can claim only one 20 percent sales discount on a particular transaction.
The issuance also highlights that benefactors of qualified PWDs, up to the fourth civil degree of consanguinity or affinity, can claim an additional tax exemption of P25,000 against their annual income tax as the PWD, regardless of age, may be considered a qualified dependent.
Any violation of these rules will be subject to the corresponding penalties under the provisions of the Tax Code and other applicable regulations issued by the BIR.
For further information, please refer to the full text of the RR.