BENEFITS AND
PRIVILEGES OF SENIOR
CITIZEN
Presented by:
Abolhasan S. Balindong, CPA
Revenue Officer
RDO 113-West Davao City
1
Legal Basis



RA 7432 / RR 2-94
RA 9257 / RR 4-2006
RA 9994



RMC 45-2010
RR 7-2010
RR 8-2010
2
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
3
Comparison of 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
establishments, purchase of
medicines for the exclusive use
and enjoyment of SC, and
funeral and burial services
4
Comparison of Benefits:
RA 7432
RA 9257
RA 9994
Min. of 20% discount 20% discount on admission fees
on admission fees
on theaters, cinema houses,
on theaters etc.
concert halls, circuses, carnivals
etc.
c. Grant of a minimum of 5%
discount on the monthly
utilization of water and
electricity supplied by public
utilities
20% discount on medical dental
d to l - plus other benefits
services, PF of attending doctors
and privileges
and diagnostic and laboratory fees
20% discount in fare for domestic
air and sea travel
20% discount in public railways,
skyways and bus fare
5
PRIVILEGES for the SENIOR
CITIZENS
a. The grant of twenty percent (20%) discount
and exemption from the value added tax
(VAT) on the sale of the following goods
and services:
1.
2.
on the purchase of medicines
on the professional fees
physician/s
of
attending
6
PRIVILEGES for the SENIOR
CITIZENS
3. on the professional fees of licensed professional
health providing home health care services
4. on medical and dental services, diagnostic and
laboratory fees
7
PRIVILEGES for the SENIOR
CITIZENS
5.
in actual fare for land transportation travel
6.
in actual transportation fare for domestic air
transport services and sea shipping vessels and
the like
8
PRIVILEGES for the SENIOR
CITIZENS
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, leisure
and amusement
9
PRIVILEGES for the SENIOR
CITIZENS
9. on funeral and burial services for the death
of senior citizens
10
PRIVILEGES for the SENIOR
CITIZENS
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
12
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.
13
PRIVILEGES for the SENIOR
CITIZENS
d. Exemption from training fees for
socioeconomic programs
e. Free medical and dental services diagnostic
and laboratory fees in all government
facilities
14
PRIVILEGES for the SENIOR
CITIZENS
f. Free vaccination against the influenza
virus and pneumococcal disease for
indigent senior citizen patients
15
PRIVILEGES for the SENIOR
CITIZENS
g. Educational assistance to senior citizens
h. 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
16
PRIVILEGES for the SENIOR
CITIZENS
i. The retirement benefits of retirees shall be
regularly reviewed to ensure their
continuing responsiveness and
sustainability
17
PRIVILEGES for the SENIOR
CITIZENS
j. The government may grant special
discounts for senior citizens on purchase of
basic commodities
k. Provision of express lanes for senior
citizens
l. Death benefit assistance of a minimum of
P 2,000.00
18
Special Discounts to Senior Citizens
Centers

50% discount on the ff consumption by Senior
Citizens Center and Residential Care/Group
Homes that are run by gov’t. or non-stock,
non-profit domestic corp:



Water
Electricity
Telephone
19
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
20
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.
21
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
22
TAXES ON PASSIVE INCOME
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 %
23
TAXES ON PASSIVE INCOME
4) 10% final withholding tax on cash and/or
property dividends
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
24
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.
25
Special Features

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
26
Special Features

SC can avail of the promotional discount or
the discount provided herein, whichever is
higher

If the promotional discount is less than the
minimum discount, the seller shall increase the
discount to meet the minimum.
27
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.
28
Tax Treatment of the Discount
Granted to SC

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
29
Comparison on Benefits
Invoice Price
Less: 12% VAT
Sales -exclusive of VAT
Less 20% Discount
Payable by SC
RA 9994 Old Law Regular
11,200.00 11,200.00 11,200.00
1,200.00
*
10,000.00 11,200.00 11,200.00
2,000.00 2,240.00
8,000.00 8,960.00 11,200.00
*[(11,200 / 112%) x 12%] = P1,200
30
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
31
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.
32
Tax Treatment of the Discount
Granted to SC

The income statement of the seller must
reflect the discount not as a reduction from
sales but as a deduction from its gross
income.
33
Tax Treatment of the Discount
Granted to SC

The entry to record the transaction in the
books of the seller:
Cash
P 40
Senior Citizen Discount Expense 10
Sales
P50
34
Tax Treatment of the Discount
Granted to SC

The discount granted by the seller of qualified
goods and services 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.
35
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
36
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;
37
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;
38
Conditions in claiming the discount granted
as an additional item of deduction:

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
39
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
40
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
41
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.

42
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
43
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
44
Exemption from VAT


Sales of goods and services under Sec. 4 & 5
of this RR shall be exempt from VAT, except
water and electricity (RR 8-2010);
The seller must follow the invoicing
requirement (RR 16-2005). If using POS, the
machine tape must segregate exempt sales
from taxable sales;
45
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
46
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
47
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 exceed
the poverty level. The SC shall submit sworn
certification.
48
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.
49
Penalties and Sanctions



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
For alien or foreigner – may suffer
deportation
If the offender is a corporation/organization,
the official/s directly involved shall be liable.
50
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 **
51
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)
Total
200,000.00
24,000.00
18,000.00
3,428.57 ***
3,600.00
x 200/210
3,428.57
21,428.57
2,571.43
52
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
53

The end
54