Presented by:
Miss Cynthia E. Omeres
Revenue Officer
Assessment Division
1



RA 7432 / RR 2-94
RA 9257 / RR 4-2006
RA 9994
 RMC 45-2010
 RR 7-2010
 RR 8-2010
2

Example:
Total Selling Price (inclusive of VAT)
Less: 12% VAT
Total Selling Price (net of VAT)
Less: 20% discount
199.95
21.42
178.53
35.71
Amount Payable by the Senior Citizen 142.82
6
c)
the grant of a minimum of five
percent (5%) discount relative to
the monthly utilization of water and
electricity supplied by the public
utilities
8
 The
granting of exemptions and
discounts shall be for the exclusive
use and enjoyment or availment of
the senior citizen on the purchase
of goods and services enumerated
in this Act.
9

In the availment of the privileges, the
senior citizen or his/her duly
authorized representative, may submit
any of the ff:
 OSCA ID (being honored nationwide)
 Passport
 Other docs to establish that SC is
citizen of the Republic and at least 60
years of age
10
 SC can avail of the promotional
discount or the discount
provided herein, whichever is
higher
11
 Establishments granting the
discount may claim the
discounts granted as a tax
deduction based on the
undiscounted SP of the goods
sold or services rendered.
12
 The selling price to be charged
by the seller must be net of VAT
because SC is exempt from VAT
13
 The cost of discount shall be
allowed as a deduction from the
gross income for the same
taxable year
14
 The discount granted by the seller
of qualified goods and services, i.e.,
the promotional discount, 20%
discount, 5% discount on water
and electricity and 50% discount
of utilities for SC Centers
15
Cont.
shall be treated as an ordinary and
necessary expense under the
category of itemized deduction and
can only be claimed if the seller
does not opt the OSD.
16

Example:
Total Selling Price (inclusive of VAT)
Less: 12% VAT
Total Selling Price (net of VAT)
Less: 20% discount
199.95
21.42
178.53
35.71
Amount Payable by the Senior Citizen 142.82
17

The entry to record the transaction in the
books of the seller:
Debit
Cash
142.82
Senior Citizen Discount Expense 35.71
Sales
Credit
178.53
18
 The discount can only be
allowed as a deduction from
gross income for the same
taxable year that the discount is
granted;
19

Required to keep accurate record of sales
 Name of SC
 OSCA ID
 Gross Sales/Receipts
 Sales discount granted
 Date of transaction
 Invoice No. of every transaction
20
 Only that portion of the gross
sales exclusively used, consumed
or enjoyed by the SC shall be
eligible for the deductible sales
discount;
21
 The gross selling price and the
sales discount must be
separately indicated in the OR
or SI
22
 The seller must follow the
invoicing requirement (RR 162005). If using POS, the machine
tape must segregate exempt sales
from taxable sales;
23
 The input tax attributable to the
exempt sale shall not be allowed as
input tax credit and must be closed
to cost or expense account.
 The exemption shall not cover
indirect taxes
24
GIVEN DATA:
Sales - Exclusive of VAT
Cost of sales -VAT exclusive
Operating Expenses
*Inclusive of discount
** inclusive of input tax of P3,600
Required: Compute for the ff:
1. VAT Payable
2. Taxable Income
SALES TO SC
10,000.00 *
8,000.00
TOTAL SALES
FOR THE
MONTH
EXCLUDING
SALES TO SC
200,000.00
150,000.00
33,600.00 **
25
Sales
Output Tax
Less Input Tax
from Purchases
from Purchases (sold to SC)
Operating Expenses
VAT Payable
***Input Tax on Operating Expenses
Add: Pro-rated VAT on OPEX (P3,600 x 10/210)
Total
200,000.00
24,000.00
18,000.00
3,428.57 ***
21,428.57
2,571.43
3,600.00
x 200/210
3,428.57
26
Sales
Cost of Sales
Gross Income
Senior Citizen Discount
Operating Expenses
Taxable Income
210,000.00
158,960.00
51,040.00
2,000.00
30,171.43
18,868.57
*
**
* Cost of Sales
VAT taxable Sales
Sales to Exempt Person + VAT component
**Operating Expenses -net of VAT
Add: Pro-rated VAT on OPEX (P3,600 x 10/210)
Total
150,000.00
8,960.00
158,960.00
30,000.00
171.43
30,171.43
27
 Generally, qualified SC deriving
returnable income, whether
from compensation or
otherwise, are required to file
and pay income tax;
28
 If qualifies as Minimum Wage
Earner
 Exempt from income tax
subject to the provisions of RR
10-2008
29
 If aggregate amount of gross
income do not exceed the personal
(basic and additional)
 Exempt from Income Tax
 Not required to file ITR
30
 The exemption of SC will not
extend to all types of income
earned during the taxable year.
31
1) 20%
final withholding tax on
interest income; royalties;
prizes and other winnings
32
2)
7.5 % final withholding tax on
interest income from a
depositary bank under the
expanded foreign currency
deposit system
33
3) Withholding
taxes on interest
income on pre-terminated long
term deposit:
less than 3 years
= 20 %
3 years to less than 4 years = 12 %
4 years to less than 5 years = 5 %
34
4)
10% final withholding tax
on cash and/or property
dividends
35
5) Capital
gains tax from sales of
shares of stock not traded in the
stock exchange
6) 6% final withholding tax on
presumed capital gains from the
sale of real property
36
(1)VAT or other percentage
taxes
(2)Donor’s tax
(3)Estate tax
(4)Excise tax on certain goods
and
(5)Documentary stamp tax
37
A SC who is MWE, or whose income
does not exceed his personal
exemption, will be exempt from
income tax upon compliance with
the ff:
38
 A SC must first be qualified by
submitting a certified true copy of
OSCA ID Card
 Must file a sworn statement on or
before Jan. 31 of every year that his
taxable income of the previous year
does not exceed the poverty level
39
 If qualified, his name shall be
recorded by the RDO in the
Master List of Tax-Exempt SC
for that particular year
40
 A senior citizen who is entitled
to substituted filing is not
required to file ITR pursuant to
RR 2-98 as amended.
41
 Private establishments are
entitled to additional deduction
of 15% of total amount paid as
salaries and wages
42
 The employment shall have to
continue for a period of at least
six (6) months
 The annual taxable income of SC
does not exceed the poverty level.
The SC shall submit sworn
certification.
43
 1st offense – Penalty of not less
than P50K but not more than
P100k and imprisonment of not
less than 2 yrs and not more
than 6 yrs.
44
 Subsequent violation - Penalty
of not less than P100K but not
more than P200k and
imprisonment of not less than 2
yrs and not more than 6 yrs.
45
 Any person who abuses the
privileges shall be punished
with a fine of not less than
P50K and not more than P100K
and imprisonment of not less
than 6 months
46
 For alien or foreigner – may
suffer deportation
 If the offender is a
corporation/organization, the
official/s directly involved shall
be liable.
47
Thank you!!!
48