TAXATION: Senior Citizen & Persons w/ Disabilities R.C.
Pendon
2021
Senior Citizens (SCs) & Persons with Disabilities (PWDs)
Who are considered Senior Citizens?
Refers to any:
1. Filipino citizen
2. who is a resident of the Philippines; and
3. who is 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 six (6) months residency in the Philippines.
Persons with Disabilities
PWDs are those who have long-term physical, mental, intellectual, or sensory
impairments which in interaction with various barriers may hinder their full and
effective participation in society on an equal basis with others.
Disabilities shall mean a physical or mental impairment that substantially limits one
or more psychological, physiological or anatomical function of an individual or
activities of such individuals; a record of such an impairment; or being regarded as
having such an impairment.
Summary of Benefits
Senior Citizen PWDs
20% discount & VAT
exempt on selected goods Yes Yes
and services
5% Special Discount on
the Sale of Prime
Yes Yes
Commodities and Basic
Necessities
5% discount on water and
Yes Not applicable
electricity
Additional deduction for
Yes Yes
compensation paid by
(15%) (25%)
employers
Special Discounts to SCs & PWDs
1. 20% discount & VAT exempt on selected goods and services
2. 5% discount on water and electricity (SCs only)
3. 5% Special Discount on the Sale of Prime Commodities and Basic Necessities
TAXATION: Senior Citizen & Persons w/ Disabilities R.C.Pendon
2021
Special Incentives for Establishments
Particulars Incentives
A Senior Citizens Center and residential For the consumption of water,
care/group homes that is: electricity, and telephone, there
o run by the Government or by a non-stock, shall be granted by public
non-profit domestic corporation utilities a discount of at least
o organized and operated primarily to promote 50%.
the well-being of abandoned, neglected,
unattached, or homeless Senior Citizens
Establishments employing Senior Citizens shall Additional deduction from their
be entitled to an provided the following gross income equivalent to 15%
conditions are met: of the total amount paid
o employment duration of at least six (6) salaries and wages to Senior
months; Citizens
o annual taxable income of the Senior Citizen
does not exceed the poverty level (as
determined by the NEDA)
Establishments employing PWDs provided the Additional deduction from their
following conditions are met: gross income equivalent to 25%
o The entities must present proof as certified of the total amount paid as
by the Department of Labor and salaries and wages to PWDs
Employment that the PWDs are under their
employment.
o PWDs is accredited with the Departments of
Labor and Employment and Health as to
their disability, skills, and qualifications.
Private entities that improve or modify their Additional deduction from their
physical facilities to provide reasonable net income, equivalent to 50%
accommodation for PWDs shall be entitled to of the direct cost of the
an improvements or modifications
20% discount & VAT exempt on selected goods and services
All establishments, supplying any of the following goods and services for the SC’s or
PWD’s exclusive use and enjoyment or availment, shall give a discount of twenty
(20%) percent plus VAT exemption. The discount shall apply to the sale of the
following:
a) Medicines, including influenza and pneumococcal vaccines, and such other
essential medical supplies, accessories and equipment
b) On the professional fees of attending physician/s in all private hospitals,
medical facilities, outpatient clinics, and home health care services
c) On professional fees of licensed professional health workers providing home
health care services
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d) On medical and dental services, diagnostic and laboratory fees in all private
hospitals, medical facilities, outpatient clinics, and home health care services
e) On actual fare for land transportation travel. (excluding toll booth fees)
f) On actual transportation fare for domestic air transport services and sea
shipping vessels and the like, based on the actual fare and advanced booking.
g) On the utilization of services in hotels and similar lodging establishments,
restaurants, and recreation centers.
h) On admission fees charged by theaters, cinema houses and concert halls,
circuses, carnivals, and other similar places of culture, leisure, and amusement
i) On funeral and burial services for the death of SCs & PWDs. The beneficiary or
any person who shall shoulder the funeral and burial expenses of the deceased
SC or PWD shall claim the discount, such as the casket, embalmment,
cremation cost and other related services for the SC or PWD upon payment and
presentation of his death certificate;
Application of discount for Restaurants
If a group of 5 comprised of four (4) Non-Senior Citizens and one (1) SC/PWD
dines in a restaurant, how should the group be billed?
o In computing the 20% discount and the exemption from VAT, the
formula shall be:
The formula above will apply if no “individualized” food item can be
ordered or if the transaction with the SC or PWD is not processed
separately.
For restaurants, are condiments and side products covered by the 20%
discount and VAT exemption?
o Yes. For restaurants, the discount shall be for the sale of food, drinks,
dessert, and other consumable items served by the establishments,
including value meals and promotional meals, offered for the
consumption of the general public.
For set meals, what are the rules?
o The 20% discount and VAT exemption also apply to set meals, provided,
that the meal shall be limited to a single-serving meal with a beverage for
an individual SC or PWD. In case the set meal is not limited to a single
serving and shared with Non-SC/Non-PWD, the value of the food
purchase attributable to the SC or PWD may be computed using the
formula previously stated.
If an SC/PWD orders various dine-in foods, then take home the leftover. Is the
order subject to a 20% discount?
o The 20% discount shall apply to dine-in, take-out, and take-home orders
(excluding bulk orders) as long as it is the SC/PWD himself/herself who
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TAXATION: Senior Citizen & Persons w/ Disabilities R.C.Pendon
2021
is present and personally ordering and can show a valid SC/PWD ID
card.
What is the rule for the purchase of group meals by “group walk-ins” or group
composed of all SC or PWD?
o If the group of diners is composed of SC or PWD who ordered for group
meals or food items for sharing in restaurants, each SC or PWD with a
valid SC or PWD ID card shall be entitled to a 20% discount and VAT
exemption, hence, if all the SC or PWD in the group have valid SC or
PWD ID cards, the entire food purchase shall be entitled to the 20%
discount and VAT exemption. In case not all the SC or PWD have their
valid SC or PWD ID cards, the value of the food purchase attributable to
SC or PWD with SC or PWD ID cards may be computed following the
formula outlined.
What is considered “bulk orders”?
o Bulk orders are within the context of pre-contracted or pre-arranged
group meals or packages, and hence, not entitled to a 20% discount and
VAT exemption.
Are set orders primarily marketed for children (i.e., happy meal or kiddie meal)
entitled to 20% discount if purchased by a Senior Citizen?
o No, meals primarily prepared and intentionally marketed for children and
not for Senior Citizen’s personal consumption are not entitled to a 20%
discount.
o But for PWD, set orders for children is subject to the 20% discount &
VAT exemption.
What comprises the Most Expensive Meal Combination (MEMC)?
o The MEMC is an amount corresponding to the combination of the most
expensive and biggest single-serving meal with beverages served in a
quick-service restaurant. The MEMC is deemed flexible and is adjusted
accordingly by food establishments to estimate a single food purchase for
an individual SC or PWD. MEMC is applied only to take-out, take-home,
drive-thru, and delivery orders.
Are purchases of “pasalubong” by SC or PWD from stores, kiosks, food carts,
and stalls in food courts subject to a 20% discount? Are they exempt from VAT?
o “Pasalubong” food items, which are single-serving/solo meal for the
personal and exclusive consumption of the SC or PWD, are entitled to the
20% discount, as well as the exemption from VAT. However, other
“pasalubong” food items (e.g., a box of biscocho, bottles or jars of
ginamos, several packets of mango preserves, etc.) which are not for the
personal and exclusive consumption of the SC or PWD are NOT entitled
to 20% discount and VAT exemption. This limitation extends to “novelty
items” or non-consumables sold in restaurants.
For call-in/phone-in orders, what are the rules?
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o Called-in or phoned-in orders are actually delivery orders entitled to 20%
discount and VAT exemption. Hence, they are likewise subject to certain
conditions; i.e., SC or PWD ID card number must be given while making
the order over the telephone; the SC or PWD ID card must also be
presented upon delivery to verify the identity of the senior citizen entitled
to the 20% discount and VAT exemption.
o In case of called-in or phoned-in orders of grouped meals, the food
establishment must determine the number of SC or PWD composing the
group, and the 20% percent discount shall be computed based on the
value of the food attributable to the qualified SC or PWD. Likewise, the
SC or PWD ID card number/s must be given while making the order over
the telephone, and the SC or PWD ID card/s must be presented upon
delivery to verify the identity of the SC or PWD entitled to the 20%
discount and VAT exemption.
Is the purchase of a whole cake subject to a 20% discount? (also applies to
pizza)
o A purchase of a whole cake may be considered as a purchase of a “group
meal or meal for sharing.” For instance, if the whole cake purchased is
good for five (5) persons, and the group of diners is composed of five (5)
SC or PWD, each with a valid SC or PWD ID card, then they shall be
entitled to the 20% discount, or the entire food purchase shall be entitled
to the 20% discount. If the group of diners is composed of SC or PWD,
but not all have their valid SC or PWD’s ID card or composed of SC or
PWD and Non- SC or Non- PWD Citizens, the value of the cake
attributable to the qualified SC or PWD/s. If an SC or PWD purchases a
slice of cake or a personal serving of cake, he shall be entitled to the 20%
discount.
What is the rule on the purchase of alcoholic products such as beer, wine, and
other liquors? Are they considered “drinks” entitled to the 20% discount and
VAT exemption?
o Generally, alcoholic beverages are not subject to the 20% discount and
VAT exemption especially if purchased “in bulk”, “in buckets” or “in
cases”. However, if served as a single serving drink, its purchase by a SC
or PWD is entitled to the 20% discount and VAT exemption.
o However, 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. A SC or PWD may still avail of the 20%
discount on the purchase of an alcoholic drink but the discount shall be
limited only to a single serving of an alcoholic beverage.
Are cigars and cigarettes considered “consumables” subject to the 20%
discount?
o Cigarettes/cigars are not food or essential items deemed subject to the
20% discount.
Are delivery fees/charges for delivery orders subject to the 20% discount?
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o If the delivery fee/charge is NOT billed separately, it is subject to the 20%
discount. However, if such delivery fee/charge is billed separately, it is
not entitled to the 20% discount and is subject to VAT.
Special Cases in granting the discount
If a store offers a promotional discount, can the 20% SC or PWD discount also
be availed?
o No. In the purchase of goods and services which are on promotional
discount, the Senior Citizen shall avail of either the promotional discount
or the 20% discount, whichever is higher. However, the discount that
must be given to the Senior Citizen shall in no case be less than 20%.
If the SC or PWD used his privilege card/promotional discount which is higher
than the 20% SC or PWD discount, is the sale exempt from VAT?
o Yes, the sale of goods and services on promotional discount is still
exempt from VAT. (Section 10 of RR No. 7-2010)
In case of business establishments are non-VAT taxpayers, are SCs or PWDs
also exempt from the payment of the percentage tax on their purchases of goods
and/or services?
o No. The law does not include exemption of payment of Percentage Tax.
Thus, the exemption does not cover other indirect taxes passed on by the
seller to a SC or PWD buyer, such as percentage tax.
5% Special Discount on Utilities (not applicable to PWDs)
The monthly utilization of water and electricity by the Senior Citizen supplied by
public utilities will be subject to a five percent (5%) discount upon concurrence of the
following:
1. the individual meters for the said utilities are registered in the name of the
Senior Citizen residing therein
2. the monthly consumption does not exceed one hundred kilowatt hours
(100kWh) of electricity and thirty cubic meters (30 m 3) of water; and
3. the privilege is granted per household regardless of the number of Senior
Citizens residing therein.
5% Special Discount on basic necessities and prime commodities
A special discount of five percent (5%) of the regular retail price of basic necessities
and prime commodities shall be granted to SC or PWD on their purchases thereof,
taking into consideration that said purchases shall be for the personal and exclusive
consumption and/or enjoyment of the SC or PWD. It is NOT exempt from VAT.
The SC or PWD shall enjoy a special discount of 5% of the regular retail price provided
that the total amount of said purchase shall not exceed P1,300 per calendar week.
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NOTE: Sari-sari stores, as well as talipapa, wet markets; and cooperative stores are
exempted from granting the 5% discount to senior citizens. Sari-sari stores refer to
“mom and pop” type of establishments that are engaged exclusively in retail business,
specifically selling an assortment of commodities in “tingi” or in small quantity solely
to end-users. Groceries operating inside the wet markets are covered by the Guidelines
to grant the special discount on select goods.
“Basic Necessities” – are goods vital to the needs of consumers for their sustenance
and existence. For purposes of this Order necessities shall include:
1. All kinds and variants of rice 11.Locally manufactured instant
2. Corn noodles
3. All kinds of bread (Pastries and 12.Coffee and coffee creamer
cakes not included) 13.All kinds of sugar (excluding
4. Fresh, dried and canned fish and sweetener)
other marine products (including 14.All kinds of cooking oil
frozen and in various modes of 15.Salt
packaging) 16.Powdered, liquid, bar laundry
5. Fresh pork, beef and poultry and detergent soap
meat 17.Firewood
6. All kinds of fresh eggs (excluding 18.Charcoal
quail eggs) 19.All kinds of candles
7. Potable water in bottles and 20.Household liquefied petroleum
containers gas, not more than 11kgs. LPG
8. Fresh and processed milk content once every five (5)
(excluding milk labelled as foods months) bought from LPG
supplement) dealers
9. Fresh vegetables including root 21.Kerosene, not more than 2 liters
crops per month.
10.Fresh fruits
“Prime Commodities” – are goods not considered as basic Necessities but are
essential to consumers. For purposes of this Order commodities shall include:
1. Flour 10.Poultry feeds, livestock feeds and
2. Dried, processed and canned fishery feeds
pork, beef and poultry meat 11.Veterinary products
3. Dairy products not falling under 12.Paper, school supplies
Section 1(a) of this Order 13.Nipa shingle
4. Onions and Garlic 14.Sawali
5. Vinegar, patis and soy sauce 15.Cement, clinker, GI sheets
6. Toilet/Bath soap 16.Hollow blocks
7. Fertilizer 17.Plywood
8. Pesticides 18.Ply Board
9. Herbicides 19.Construction nails
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TAXATION: Senior Citizen & Persons w/ Disabilities R.C.Pendon
2021
20.Batteries (excluding cellphone 21.Electrical supplies and light
and automotive batteries) bulbs
22.Steel wires
Discount is an Ordinary and Necessary expense for the establishment
The discount granted by the seller to the SC or PWD shall be treated as an ordinary
and necessary expense deductible from gross income. It cannot be claimed as expense
if the taxpayer elected the OSD option in computing net taxable income.
Carlos Superdrug Corp. v. DSWD
This Supreme Court case questions the validity of the benefits granted to senior
citizen. It should be noted that the benefits and discount granted are made mandatory
by law and the losses are shouldered by the private establishments. No
reimbursement or subsidy will be given by the government. The only benefit given to
the private establishments is that they can claim it as a tax deduction, which is not
enough to cover everything.
Having said that, this raises the question of whether the State can impose upon
private establishments the burden of partly subsidizing a government program.
The SC said yes for it is inline with the state’s police power. For this reason, property
rights must bow to the primacy of police power because property rights, though
sheltered by due process, must yield to general welfare.
Police power as an attribute to promote the common good would be diluted
considerably if on the mere plea of petitioners that they will suffer loss of earnings and
capital, the questioned provision is invalidated.
Problem 1
A VAT-registered restaurant has signage on every table. It says that “Senior Citizen
Discount is limited to P145.00 per person”. A senior citizen ordered a meal for a total
of P1,200 gross of VAT and before discount. How much will the senior citizen pay?
Answer: P 857.14
Problem 2
Mr. Wanna is a former chief accountant of SMF Holdings. Due to his old age he retired
and subsequently registered as a Senior Citizen to avail the benefits specified in R.A.
9994. Even though he is a former chief accountant, he is not aware of the other
benefits that a SC can acquire since it is not within his field of expertise. He
approached you to ask what the different benefits are. You asked what his recent
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purchases are, and his recent bill from Meralco and Maynilad, all are in the Elder’s
Name & Residence, he presented to you the following:
Meralco Bill - P1,800 for 150 kwh
Maynilad Bill - P1,350 for 40 cubic meters
The following were bought by Mr. Wanna from a grocery store 3 days ago:
Fresh Fruits P200 Sugar P80
Canned P350 Firewood P120
Tuna
Steel wire P100 Candles P95
Fresh Eggs P90 Herbicides P375
Assuming that all amounts are VAT inclusive, if applicable, & Mr. Wanna did not avail
of the SC benefits, how much is the total amount paid if the benefits were exercised?
Answer: P 4,384.37
Problem 3
Due to the pandemic, you and your four other family members decided to order food
online. As you scroll through Grub, there are so many choices. After arguing with each
other, your family finally settled to order a group meal from Pizza Kubo and a whole
cake from Reddish Ribbon. Two members of the family is a senior citizen. Details of
the order are as follows at their normal price before VAT: (all items are VAT inclusive)
Pizza Kubo Pizza Family Grub (good for 6 people) P 3,360
Reddish Ribbon Trible Role Chocolate Cake (good for 8 P 672
people)
Delivery Fee Separately billed P 100
How much will you pay after applying the special senior citizen discount including
VAT? Answer: P 3,764
Problem 4
Aling Neneng Corp., registered with BIR in 2012, has the following data for the year
2021:
Gross Sales P 1,000,000
PWD & SC Discounts given 100,000
Returns and allowances 150,000
Cost of Goods Sold 300,000
Salaries to personnel* 250,000
*20% was given to SCs while 25% is given to PWDs
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TAXATION: Senior Citizen & Persons w/ Disabilities R.C.Pendon
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Q1: How much is the total output tax?
Answer: P 42,000
Q2: How much is the gross income?
Answer: P 550,000
Q2: How much is the net taxable income?
Answer: P 176,875
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