1 Presented by: Miss Cynthia E. Omeres Revenue Officer Assessment Division

 RA 7432 / RR 2-94  RA 9257 / RR  RA 9994  RMC  RR  RR

(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. on the purchase of medicines 2. on the professional fees of attending physician/s 3

3. on the professional fees of licensed professional health providing home health care services 4. on medical and dental services, diagnostic and laboratory fees 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 4

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. on funeral and burial services for the death of senior citizens 5

 Example: Total Selling Price (inclusive of VAT) Less: 12% VAT Total Selling Price (net of VAT) Less: 20% discount Amount Payable by the Senior Citizen

(b) exemption from the payment of individual income taxes of senior citizens who are considered to be minimum wage earners in accordance with Republic Act No

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

17  Example: Total Selling Price (inclusive of VAT) Less: 12% VAT Total Selling Price (net of VAT) Less: 20% discount Amount Payable by the Senior Citizen

 The entry to record the transaction in the books of the seller: Debit Credit Cash Senior Citizen Discount Expense Sales

 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 ). 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

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 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

 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

 1 st 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

48 Thank you!!!