VAT-Related Privileges for Senior Citizens

Pertinent BIR Issuances

 RR 7-2010 – implements the tax privileges provision of the Expanded Senior Citizens Act of 2010 (RA 9994)
 RR 8-2010 – amended Sec. 10, par. 1 of RR 7-2010
 RMC 45-2010 – merely circularizes among the BIR officials, employees and other persons concerned Sections 4 and 5 of RA
9994 which grant additional benefits and privileges to Senior Citizens
 RR 38-2010 – frequently-asked questions on the provisions of RR 7-2010 as amended by RR 8-2010

Definition of Terms

 Senior Citizen or Elderly — any Filipino citizen who is a resident of the Philippines, sixty (60) years old or above. It may apply to
senior citizens with “dual citizenship” status provided they prove their Filipino citizenship and have at least 6 months residency
in the Philippines
 Minimum Wage Earner — a worker in the private sector who is paid the statutory minimum wage, or an employee in the
public sector with compensation income of not more than the statutory minimum wage in the non‐ agricultural sector where
he/she is assigned
 OSCA — the Office for Senior Citizens Affairs of cities and municipalities, which is headed by a Senior Citizen, who shall serve
for a term of three (3) years

Salient Features on VAT

 A Senior Citizen is SUBJECT to VAT:

o if he/she is:
 self-employed OR engaged in business or practice of profession, AND
 his gross annual sales and/or receipts EXCEEDS P1,500,000 or such amount to which this may be adjusted
pursuant to Sec 109(1)(V) of the Tax Code.
 Otherwise, he shall be subject to 3% Percentage Tax
o on his/her electric and water consumption (RR 8-2010)
 20% discount and VAT exemption for the sale of the following goods and services (exclusive list):
1. Medical-related privileges
a. medicines, including influenza and pneumococcal vaccines, and such other essential medical supplies,
accessories and equipment to be determined by DOH
 medicines – both prescription and non‐prescription medicines, and articles approved by the BFAD‐
DOH
a) INCLUDE: vitamins and mineral supplements which are medically prescribed by an
attending physician
b) EXCLUDE: food and devices or their components, parts, or accessories
 essential medical supplies, accessories and equipment include:
a) eyeglasses
b) hearing aids
c) dentures
d) prosthetics
e) artificial bone replacements like walkers, crutches, canes, and wheelchair
f) geriatric diapers, and
g) other essential medical supplies, accessories and equipment by or for senior citizens
b. professional fees of attending physician/s in all private hospitals, medical facilities, outpatient clinics and home
health care services
 discount shall be based on the compensation for services charged from the Senior Citizen
c. professional fees of licensed professional health workers providing home health care services as endorsed by
private hospitals or employed through home health care employment agencies

Report prepared and presented on August 1, 2015 by: ELUMBA, Christian Philip | ESTOQUE, Homelo | FORTUNA, Jeryl Grace | JUGAN, Gee-Ann | LIM,
Carie Emerald | LORA, Kristian Jacob Abad (UC Law Tax II – 1st Sem; AY 15-16)
  home health care services – health or supportive care provided to the Senior Citizen patient at home
by licensed health care professionals to include but not limited to physicians, nurses, midwives,
physical therapists and caregivers
 burden of the discount shall be borne solely by the employment agency given the health worker’s
very minimal share compared to the agency fee
d. medical and dental services, diagnostic and laboratory fees in all private hospitals, medical facilities,
outpatient clinics, and home health care services, in accordance with the rules and regulations to be issued by
the DOH, in coordination with the Philippine Health Insurance Corporation (PhilHealth);
2. Domestic transportation privileges
a. actual fare for LAND transportation travel in public utility buses (PUBs), public utility jeepneys (PUJs), taxis,
Asian utility vehicles (AUVs), shuttle services and public railways, including Light Rail Transit (LRT), Mass Rail
Transit (MRT) , and Philippine National Railways (PNR);
b. actual transportation fare for domestic AIR transport services and SEA shipping vessels and the like, based on
the actual fare and advanced booking;
3. Services in hotels and similar lodging establishments, restaurants and recreation centers
a. hotels INCLUDE beach and mountain resorts
b. lodging establishments
 also include lodging houses, which shall mean such establishments are regularly engaged in the hotel
business, but which, nevertheless, are not registered, classified and licensed as hotels by reason of
inadequate essential facilities and services.
 EXCLUDE: long-term arrangement for residential purposes
c. restaurants
 sale of food, drinks, dessert and other consumable items
 INCLUDE: value meals and promotional meals offered for the consumption of the general public
 Most Expensive Meal Combination (MEMC) shall apply to food purchases by senior citizens. The
MEMC is an amount corresponding to the combination of the most expensive and biggest single‐
serving meal with beverage served in a quick service restaurant, is deemed flexible and is adjusted
accordingly by food establishments to estimate a single food purchase for an individual senior citizen.
4. Culture, leisure and amusement privilege
a. admission fees charged by theaters, cinema houses and concert halls, circuses, carnivals, and other similar
places of culture, leisure and amusement
5. Funeral and burial services for the death of Senior Citizens
a. Under the Senior Citizens Act, funeral and burial services include:
 purchase of the casket or urn,
 embalming,
 cremation costs,
 pick-up of the body from the morgue,
 transport for burial at his/her hometown
b. but EXCLUDE:
 obituary publication
 cost of memorial lot

provided that, the abovementioned goods and services shall be for the EXCLUSIVE use and enjoyment or availment of
the Senior Citizen.

 5% Discount on Monthly Electric and Water Consumption

To avail of such privilege, the following requisites must be met:
a) electricity and/or water is/are supplied by public utilities;
b) individual meters for the foregoing utilities are registered in the name of the senior citizen residing therein;
c) and, monthly consumption does not exceed one hundred kilowatt hours (100 kWh) of electricity and thirty cubic
3
meters (30 m ) of water.

The privilege is granted per household regardless of the number of senior citizens residing therein.
Report prepared and presented on August 1, 2015 by: ELUMBA, Christian Philip | ESTOQUE, Homelo | FORTUNA, Jeryl Grace | JUGAN, Gee-Ann | LIM,
Carie Emerald | LORA, Kristian Jacob Abad (UC Law Tax II – 1st Sem; AY 15-16)
  50% DISCOUNT on water, electricity and telephone expenses
o granted to senior citizens center and residential care/group homes that are run by the government or by a non-
stock, non-profit domestic corporation organized and operated primarily for the purpose of promoting the well-
being of abandoned, neglected, unattached and homeless senior citizens, subject to the guidelines provided by
DSWD

Proof to Present to Avail the Privileges

To avail of the aforementioned benefits and privileges, the Senior Citizen OR his authorized representative may present ANY of
the following:

1) Senior Citizen ID (identification card) issued by the Office of the Senior Citizen Affairs (OSCA) of the place where the senior
citizen resides. This ID issued by the particular OSCA is honored nationwide;
2) passport of the senior citizen concerned; and
3) other documents that establish senior citizenship, that is, (1) the senior citizen is a citizen of the Republic and (2) is at least
sixty (60) years of age.

Tax Deduction: Incentive Granted to the Establishment

The establishment may claim the discounts ACTUALLY granted (the 20% discount and 5% discount) as TAX DEDUCTION from
their gross income based on the cost of the goods sold or services rendered.

By way of example, if a VAT‐registered drug store sells 10 pieces of Allopurinol at an undiscounted selling price of P5.00 per
piece, the cost of the discount is computed as follows:

Selling Price (VAT‐exempt) of 10 pcs. at P5.00/pc. P50.00

Less: 20% Discount 10.00
Amount Payable by the Senior Citizen P40.00

Requisites:

a) Only the portion of the gross sales exclusively used, consumed or enjoyed by the senior citizen shall be eligible for the
deductible sales discount
b) The gross selling price and the sales discount must be separately indicated in the official receipt or sales invoice issued by
the establishment for the sale of goods or services to the senior citizen
c) the cost of the discount shall be allowed as deduction from gross income for the same taxable year that the discount is
granted
d) the total amount of the claimed tax deduction net of VAT (meaning: minus the VAT), if applicable, shall be included in
their gross sales receipts for tax purposes and shall be subject to proper documentation and to the provisions of the
National Internal Revenue Code (NIRC)
e) seller must record its sales INCLUSIVE of the discount granted
f) seller must NOT claim optional standard deduction for the taxable year
g) If the seller uses a Point of Sale Machine or a Cash Register Machine, in lieu of regular sales invoice, the machine tape
must properly segregate the exempt sales from taxable sales. The input tax attributable to the exempt sale shall not be
allowed as an input tax credit and must be closed to cost or expense account by the seller
h) sellers are precluded from billing any VAT to the senior citizen to ensure full entitlement of discount prescribed in RA
9994

Penalties for Violation of the BIR Issuances and RA 9994

st
1. For the 1 violation,
Fine – P50,000 to P100,000, AND
Imprisonment –2 yrs to 6yrs

2. Subsequent violation
Report prepared and presented on August 1, 2015 by: ELUMBA, Christian Philip | ESTOQUE, Homelo | FORTUNA, Jeryl Grace | JUGAN, Gee-Ann | LIM,
Carie Emerald | LORA, Kristian Jacob Abad (UC Law Tax II – 1st Sem; AY 15-16)
 Fine – P100,000 to P200,000, AND
Imprisonment- 2 yrs to 6 yrs

Any person who abuses the privileges shall be punished with:

- Fine: P50,000 to P100,000 AND
- Imprisonment: NLT 6 months.
- If the offender is a foreigner, he shall be deported immediately AFTER service of sentence without further deportation
proceedings
- If the offender is a corporation, organization or similar entity, the official/s thereof DIRECTLY INVOLVED shall be liable

Upon filing of an appropriate complaint and after due notice and hearing, the proper authorities may also cause the
cancellation or revocation of the business permit, permit to operate, franchise and other similar privileges granted to any business
entity that fails to abide by the provisions of the Act and its IRR and Regulations.

FAQs (RR 38-2012)

YES (VAT-Exempt) NO
1. For restaurants, are condiments and side products covered by the Senior Citizen 
Discount and VAT Exemption?
2. If a Senior Citizen orders various dine-in foods, then takes home the leftover, is

the order subject to 20% discount?
3. Take‐Out/Take‐Home/Drive‐Thru orders? 
4. “Pre‐contracted contracted” party packages or bulk orders  
5. Are set orders primarily prepared and intentionally marketed for children (i.e.,
happy meal or kiddie meal) entitled to 20% discount if purchased by a Senior 
Citizen?
6. Are purchases of “pasalubong” by Senior Citizen from stores, kiosks, food carts, 
and stalls in food carts, and stalls in food courts subject to 20% discount?
7. Is the purchase of a whole cake subject to 20% discount? It depends
8. Are cigars and cigarettes considered “consumables” subject to the 20% discount? 
9. If medicine is bought in a grocery, supermarket or convenience store, is it subject

to the 20% discount and VAT exemption?
10. Are delivery fees/charges for delivery orders subject to the 20% discount? If billed
If the delivery fee
separately, it is
is NOT billed
NOT entitled
separately, it is
to the 20%
subject to 20%
discount and is
discount.
subject to VAT.
11. Are the toll fees subject to 20% discount 
12. Are taxi fares subject to 20% discount? 
13. In case of purchase of goods and services which are on promotional discount, e.g.
discounted sale upon use of a membership/privilege card, may the Senior citizen 
still avail of the 20% discount?
14. If the Senior Citizen used his privilege card/promotional discount which is higher

than the 20% SC discount, is the sale exempt from VAT?
15. In case of business establishments which are not subject to VAT but to
Percentage Tax because their gross annual sales/receipts do not reach the
threshold amount of 1,919,500 under RR 16-2005, as amended by RR 16-2011, 
are Senior Citizens also exempt from the payment of the percentage tax on their
purchases of goods and/or services which are other otherwise exempt from VAT?
16. Is there a maximum amount or cap on the discount that may be granted to
Senior Citizens? For example, may a restaurant limit the grant of discount to 
Senior Citizens to P40 even if the computed 20% discount is higher than P40?
Report prepared and presented on August 1, 2015 by: ELUMBA, Christian Philip | ESTOQUE, Homelo | FORTUNA, Jeryl Grace | JUGAN, Gee-Ann | LIM,
Carie Emerald | LORA, Kristian Jacob Abad (UC Law Tax II – 1st Sem; AY 15-16)
RULES FOUND IN RR 38-2012

Q: For set meals, what are the rules?

A: The 20% discount and VAT exemption applies. Provided, that the meal shall be limited to a single-serving meal with beverage
for an individual senior citizen.

Q: What is the rule for purchase of group meals by “group walk-ins” or group composed of all Senior Citizens?
A: Each Senior Citizen with a valid SC ID Card shall be entitled to a 20% discount and VAT exemption.

Q: For call –in/phone orders, what are the rules?

A: Called –in or phoned –in orders are actually delivery orders entitled to a 20% discount and VAT exemption. Provided, the SC
card number must be given during the phone order and must be presented upon delivery.

In case of called –in orders of grouped meals, the food establishment must determine the number of SC and the 20% discount
shall be attributable only to those who are SC. Likewise, ID numbers must be provided over the phone and presented upon
delivery.

Q: What is the rule on the purchase of double/family pizza by a SC?

A: In order to avail of the 20% discount, all diners must be an SC and all must have valid ID’s.

Q: What is the rule on the purchase of alcoholic beverages? Are they considered “drinks” entitled to the 20% discount and VAT
exemption?
A: Generally, No especially if purchased in “bulk”, in “buckets” or in “cases”.

However, if served as a “single serving drink” its purchase is subject to 20% discount and VAT Exemption.

However, if the alcoholic beverages purchased in a bar, club or cabaret are exempt from VAT but subject to amusement tax of
18% under Section 125 of the NIRC, as amended. The SC may still avail of the 20% discount but is still limited to “single serving”
of an alcoholic beverages.

Q: Is there an additional expense or loss on the part of the retailers arising from the 20% discount and VAT exemption on the
purchases by SC?
A: Any additional expense or loss arising from the 20% discount and VAT exemption on the purchases of the SC shall be
shouldered by the State. The 20% discount given by business establishments is deductible from their gross income during the
same taxable year.

TAX TREATMENT

YES NO
1. Can the input tax attributable to VAT –exempt 
sales to SC be claimed as tax Credit?
2. Are the purchase of basic necessities and prime 
commodities exempt from payment of VAT?

Report prepared and presented on August 1, 2015 by: ELUMBA, Christian Philip | ESTOQUE, Homelo | FORTUNA, Jeryl Grace | JUGAN, Gee-Ann | LIM,
Carie Emerald | LORA, Kristian Jacob Abad (UC Law Tax II – 1st Sem; AY 15-16)
VAT-Related Privileges for Persons with Disabilities (PWDs)

Pertinent BIR Issuances

 RR 1-2009 – implements the tax privileges provision of the Magna Carta for Persons with Disability (RA 9442) and amended Sec.
6.6.12 of the IRR of RA 9442

Definition of Terms

 Disability — physical or mental impairment that substantially limit one or more psychological, physiological or anatomical
function of an individual or activities of such individuals, a record of such impairment or being regarded of such impairment
 Person with Disability (PWD) — an individual suffering from restriction or different abilities, as a result of mental, physical or
sensory impairment to perform an activity in a manner or within the range considered normal for human being
 Sales Discount —actual discount or that discount which in no case shall exceed 20% of the gross selling price of goods sold or
services rendered to persons with disability by establishments enumerated under the Act

Salient Features

 All PWDs are SUBJECT to VAT

 at least 20% discount for the sale of the following goods and services (exclusive list):
1. Medical-related privileges
a. medicines, in all drugstores
b. medical and dental privileges in PRIVATE and GOVERNMENT facilities such as but not limited to diagnostic and
laboratory fees (e.g., x-rays, computerized tomography, scans and blood tests), including professional fees of
attending doctors (in private facilities), subject to guidelines to be issued by the Department of Health, in
coordination with the Philippine Health Insurance Corporation (PhilHealth);
2. Domestic transportation privileges
a. actual fare for LAND transportation travel in buses (ordinary or aircon fares), on public railways (such as LRT, MRT,
PNR), and other similar infrastructure that will be constructed, established an operated by public or private entity
 INCLUDE: Toll fees of skyways, and expressways; however, this privilege can be availed only by a PWD
OWNING the vehicle
b. actual transportation fare for domestic AIR transport services and SEA shipping vessels
 EXCLUDE: promotional fare
1. BUT, If the promotional fare discount is higher than the 20% discount privilege, the person with
disability may choose the promotional fare but should NO LONGER BE ENTITLED to the 20%
discount privilege
3. Services in hotels and similar lodging establishments, restaurants
4. Sports and recreation centers
5. Culture, leisure and amusement privilege
a. admission fees charged by theaters, cinema houses and concert halls, circuses, carnivals, and other similar places of
culture, leisure and amusement
 Basis of COMPUTATION of VAT on Sale of Goods or Services to PWDs
Amount of sale (without the VAT) Php 100.00
Less: 20% sales discount Php 20.00
Vatable Sale Php 80.00
Plus: 12% VAT (based on Php 80.00) Php 9.60
Amount Payable by PWD Php 89.60

 PROHIBITION on availment of DOUBLE discounts

o The PWD can only claim EITHER of the following discounts:
 20% discount privilege granted by RA 9442; OR,
 a higher discount as may be granted by commercial establishments and/or other existing laws or in
combination with other discount programs

Report prepared and presented on August 1, 2015 by: ELUMBA, Christian Philip | ESTOQUE, Homelo | FORTUNA, Jeryl Grace | JUGAN, Gee-Ann | LIM,
Carie Emerald | LORA, Kristian Jacob Abad (UC Law Tax II – 1st Sem; AY 15-16)
 o Thus, a person with disability who is at the same a senior citizen, can ONLY CLAIM ONE 20% discount on a particular
sales transactions

Proof to Present to Avail the Privileges

To avail of the aforementioned benefits and privileges, the Senior Citizen OR his authorized representative may present ANY of
the following:

1) An identification card (ID) issued by the city/municipal mayor or barangay captain of the place where the PWD resides;
2) Passport;
3) Transportation Discount Fee Identification Card (ID) issued by the National Council for the Welfare of the Disabled Person
(NCWPD)

Tax Deduction: Incentive Granted to the Establishment

The establishment may claim the sales discounts ACTUALLY granted as TAX DEDUCTION from their gross income, provided:

a) The sales discounts shall be deducted from gross income after deducting the cost of goods sold or the cost of service;
b) The cost of the sales discount shall be allowed as deduction from gross income for the taxable year that the discount is
granted;
c) Only that portion of the gross sales exclusively used, consumed or enjoyed by the person with disability shall be eligible
for the deductible sales discount;
d) The gross selling price and the sales discount must be separately indicated in the sales invoice or official receipt issued by
the establishment for the sale of goods or services to the person with disability;
e) Only the actual amount of the sales discount granted or a sales discount NOT EXCEEDING 20% of the gross selling price or
gross receipt CAN BE DEDUCTED from the gross income, net of Value-Added Tax (VAT), if applicable, for Income Tax
purposes and from gross sales or gross receipts of the business enterprise concerned, for VAT or other Percentage Tax
purposes; and shall be subject to proper documentation under pertinent provisions of the Tax Code of 1997, as amended;
f) The business establishment giving sales discount to qualified person disability is required to keep separate and accurate
records of sales, which shall include the name of the person with disability, ID number, gross sales/receipts, sales discount
granted, date of transactions, and invoice number for every sale transaction to person with disability.

Penalties for Violation of the BIR Issuances and RA 9994

st
1. For the 1 violation,
Fine – P50,000 to P100,000, OR
Imprisonment –4 mos. to 2 yrs, OR
BOTH at the discretion of the court

2. Subsequent violation
Fine – P100,000 to P200,000, OR
Imprisonment- 2 yrs to 6 yrs, OR
BOTH at the discretion of the court

Any person who abuses the privileges granted shall be punished with:
- Fine: P5,000 to P50,000 OR
- Imprisonment: NLT 6 months.
- If the offender is a foreigner, he shall be deported immediately AFTER service of sentence without further deportation
proceedings
- If the offender is a corporation, organization or similar entity, the official/s thereof DIRECTLY INVOLVED shall be liable

Upon filing of an appropriate complaint and after due notice and hearing, the proper authorities may also cause the
cancellation or revocation of the business permit, permit to operate, franchise and other similar privileges granted to any business
entity that fails to abide by the provisions of the Act and its IRR and Regulations.

Report prepared and presented on August 1, 2015 by: ELUMBA, Christian Philip | ESTOQUE, Homelo | FORTUNA, Jeryl Grace | JUGAN, Gee-Ann | LIM,
Carie Emerald | LORA, Kristian Jacob Abad (UC Law Tax II – 1st Sem; AY 15-16)