BENEFITS AND
PRIVILEGES TO SENIOR
CITIZEN
Presented by:
Susan D. Tusoy
Asst. Chief, Assessment Division, RR 19
1
Legal Basis



RA 7432 / RR 2-94
RA 9257 / RR 4-2006
RA 9994


RMC 45-2010
RR 7-2010
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Prescribe the guidelines for:





The availment of the income tax exemption of senior
citizens;
VAT exemption privileges
Tax privileges granted to establishments giving
discount
Tax implication of taking care and supporting senior
citizen
Tax privileges granted to entities who engage senior
citizen as their employees
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Benefits:
RA 7432
RA 9257
RA 9994
Exemption from ITR
- Annual TaxabIe does not
exceed P60k or such
amount determined by
NEDA
Exemption from ITR
- Annual TaxabIe does not
exceed the poverty level as
determined by NEDA
a. Exemption from Income Tax
who are considered to be
minimum wage earners under RA
9504.
20% discount on
transportation services,
hotels and similar lodging
establishments, restaurant,
recreation centers, and
purchases of medicine
anywhere in the country
20% discount from all
b. 20% discount and
establishments on services of
exemption from VAT:
hotels and similar lodging
1. Purchase of medicines,
establishments, purchase of
influenza and
medicines for the exclusive
pnuemococcal vaccines,
use and enjoyment of SC, and
and other essential medical
funeral and burial services
supplies, accessories and
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equipments
Benefits:
RA 7432
RA 9257
Min. of 20% discount 20% discount on admission
on admission fees
fees on theaters, cinema
on theaters etc.
houses, concert halls,
circuses, carnivals etc.
20% discount on medical
dental services, PF of
attending doctors and
diagnostic and laboratory
fees
RA 9994
2.
3.
4.
5.
20% discount in fare for
domestic air and sea travel
20% discount in public
railways, skyways and bus
fare
6.
PF of attending physicians
PF of licensed professional health
providing home health care
services
On medical/dental services,
diagnostic and laboratory fees
In actual fare for land
transportation travel in PUBs,
PUJs, taxis,AUVs, shuttle services
and public railways, including LRT,
MRT, and PNR
Actual transportation fare for
domestic air transport services
and sea shipping vessels, based on
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the actual fare & advanced booking
Benefits:
RA 7432
RA 9257
RA 9994
7. On the utilization of services in hotels
and similar lodging establishments,
restaurants and recreation
centers
8. On admission fees charged by
theaters, cinema houses and
concert halls, circuses, leisure and
amusement; and
9. On funeral and burial services for the
death of senior citizen
c. Grant of a minimum of 5% discount on
the monthly utilization of water and
electricity supplied by public
utilities
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On the utilization of water & electricity




Minimum of 5% discount
The individual meters are registered in the name
of SC residing therein
Provided that the monthly consumption does not
exceed:
 100 kWh for electricity
 30 cubic meters for water
The privilege is granted per household regardless
of the number of SC residing therein.
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PRIVILEGES for the SENIOR
CITIZENS
(d)
(e)
(f)
Exemption from training fees for
socioeconomic programs
Free medical and dental services diagnostic
and laboratory fees in all government
facilities
Free vaccination against the influenza
virus and pneumococcal disease for
indigent senior citizen patients
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PRIVILEGES for the SENIOR
CITIZENS
(g)
(h)
(i)
Educational assistance to senior citizens
The continuance of the same benefits and
privileges given by the GSIS, the SSS and
the PAG-IBIG as the case maybe, as are
enjoyed by those in actual service
The retirement benefits of retirees shall be
regularly reviewed to ensure their
continuing responsiveness and
sustainability
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PRIVILEGES for the SENIOR
CITIZENS
(j)
(k)
(l)
The government may grant special
discounts for senior citizens on purchase of
basic commodities
Provision of express lanes for senior
citizens
Death benefit assistance of a minimum of
P 2,000.00
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Income Tax of Senior Citizen


Generally, qualified SC deriving returnable
income, whether from compensation or
otherwise, are required to file and pay income
tax;
If qualifies as Minimum Wage Earner

Exempt from income tax subject to the
provisions of RR 10-2008
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Income Tax of Senior Citizen

If aggregate amount of gross income do not
exceed the personal (basic and additional)



Exempt from Income Tax
Not required to file ITR
The exemption of SC will not extend to all
types of income earned during the taxable
year.
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TAXES ON PASSIVE INCOME
(1)
(2)
20% final withholding tax on interest
income; royalties; prizes and other
winnings
7 ½ % final withholding tax on interest
income from a depositary bank under the
expanded foreign currency deposit system
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TAXES ON PASSIVE INCOME
(4)
(5)
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 %
10% final withholding tax on cash and/or
property dividends
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TAXES ON PASSIVE INCOME
(6)
(7)
Capital gains tax from sales of shares of
stock not traded in the stock exchange
6% final withholding tax on presumed
capital gains from the sale of real property
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Special Features


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.
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
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Special Features

SC can avail of the promotional discount or
the discount provided herein, whichever is
higher
21
Tax Treatment of the Discount
Granted to SC


Establishments granting the discount may
claim the discounts granted as a tax deduction
based on the cost of the goods sold or services
rendered.
Example:
Selling Price (10 pcs. Allopurinol @P5/pc) P 50.00
Less 20% Discount
10.00
Amount payable by the Senior Citizen P 40.00
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Tax Treatment of the Discount
Granted to SC


The selling price to be charged by the seller
must be net of VAT because SC is exempt
from VAT
The cost of discount shall be allowed as a
deduction from the gross income for the same
taxable year
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Tax Treatment of the Discount
Granted to SC


For the establishment to be allowed to claim
the discount as a deduction, the amount of
sales that must be reported for tax purposes is
the undiscounted SP and not the amount of
sales net of the discount.
The income statement of the seller must
reflect the discount not as a reduction from
sales but as a deduction from its gross
income.
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Tax Treatment of the Discount
Granted to SC

The entry to record the transaction in the
books of the seller:
Debit –Cash
P 40
Senior Citizen Discount Expense 10
Credit – Sales
P50
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Tax Treatment of the Discount
Granted to SC

The discount granted by the seller of qualified
goods and services, i.e., the promotional
discount, 20% discount, 5% discount on water
and electricity of the 50% discount of utilities
for SC Centers 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.
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Conditions in claiming the discount granted
as an additional item of deduction:


Only that portion of the gross sales
exclusively used, consumed or enjoyed by the
SC shall be eligible for the deductible sales
discount;
The gross selling price and the sales discount
must be separately indicated in the OR or SI
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Conditions in claiming the discount granted
as an additional item of deduction:


Only the actual amount of the discount
granted or a sales discount not less than the
statutory rate, whichever is higher, based on
the gross selling price can be deducted from
gross income/gross receipts;
The seller must record its sales inclusive of
the discount granted;
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Conditions in claiming the discount granted
as an additional item of deduction:


The discount can only be allowed as a
deduction from gross income for the same
taxable year that the discount is granted;
Required to keep accurate record of sales




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Name of SC
OSCA ID
Gross Sales/Receipts
Sales discount granted
Date of transaction
Invoice No. of every transaction
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Conditions in claiming the discount granted
as an additional item of deduction:


Only business establishments selling any of
the qualified goods and services to Senior
Citizens where an actual discount was granted
may claim the deduction;
The seller must not claim the OSD
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Availment of Income Tax
Exemption of SC
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:


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
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Availment of Income Tax
Exemption of SC
If qualified, his name shall be recorded by the
RDO in the Master List of Tax-Exempt SC
for that particular year
A senior citizen who is entitled to substituted
filing is not required to file ITR pursuant to
RR 2-98 as amended.

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Special Features

The total amount of the claimed tax deduction
net of VAT shall be included in their gross
sales/receipts for tax purposes and shall be
subject to proper documentation
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LIABILITY FOR OTHER
INTERNAL REVENUE TAXES
(1)
(2)
(3)
(4)
(5)
VAT or other percentage taxes
Donor’s tax
Estate tax
Excise tax on certain goods and
Documentary stamp tax
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Exemption from VAT


Sales of goods and services under Sec. 4 & 5
of this RR shall be exempt from VAT;
The seller must follow the invoicing
requirement (RR 16-2005). If using POS, the
machine tape must segregate exempt sales
from taxable sales;
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Exemption from VAT


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
36
Personal Exemptions of
Benefactors of Senior Citizen



The benefactor shall be entitled to claim the
basic personal exemption of P50,000
Not entitled to additional P25,000
If required to file an ITR, the benefactor shall
state therein the name, birtday and OSCA ID
No. of the dependent senior citizen
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Additional Deduction for those
Employing Senior Citizen

Private establishments are entitled to
additional deduction of 15% of total amount
paid as salaries and wages


The employment shall have to continue for a
period of at least six (6) months
The annual taxable income of SC does not excess
the poverty level. The SC shall submit sworn
certification.
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Penalties and Sanctions


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.
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.
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Penalties and Sanctions



Any person who abuses the privileges shall be
punishes with a fine of not less than P50K and
not more than P100K and imprisonment of
not less than 6 months
For alien or foreigner – may suffer
deportation
If the offender is a corporation/organization,
the official/s directly involved shall be liable.
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Illustration
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 **
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VAT Payable
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)
200,000.00
24,000.00
18,000.00
3,428.57 ***
3,600.00
x 200/210
21,428.57
2,571.43
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Taxable Income
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)
150,000.00
8,960.00
158,960.00
30,000.00
171.43
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Daghang salamat!
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